I wrote about these upcoming Mortgage Insurance changes a few days ago and I found, in the Sunday Wall Street Journal, an article that talks about these changes too. The article discusses the same loan amount that I did of $193,000. The WSJ came up with different numbers than I did. The WSJ says that buyers will save $2,400 dollars up front and the monthly costs will go from $88/month to $148 dollars/month. That is not as bad as I reported. The WSJ went on to talk about the additional cost over a ten year period, which would be more than $7,000. Buyers that are planning to stay in their home for a long period of time are much better off buying prior to 10/4/10 when the change is set to take place. Buyers looking to buy and move in less than three years are better off to wait until after 10/4/10 to make the purchase. Click WSJ to see the whole article.
The WSJ did not report what the new upfront or monthly percentages would change to on 10/4 so I did a little more research. It turns out that there are a lot of interpretations to what the changes will mean and it looks like the new monthly charge will be base on .90% of the loan amount(not the 1.55% I reported). I think the bottom line is that FHA fees are changing and the longer the buyer stays in their new home, the more MI is going to cost them under the new rules. The higher MI monthly rates will mean that buyers will qualify for a smaller loan amount. Is it really a good idea to be raising costs on loans in such a difficult market?
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