Qualified buyers should act fast to purchase their favorite home. The FHA is making an upward adjustment to the Mortgage Insurance Premium percentage monthly fee. Currently MI is at .90%. However on April 18th, 2011, MI is rising to 1.15%. This means that for a loan amount of $200,000, where the monthly MI charge is $150 per month, the new monthly charge will be $191.67 per month, or $41.67 more.
This increase also acts to decrease the purchasers buying power as they will qualify for less loan because of the additional monthly expense load. In order to cover the $41.67 per month, the buyer's loan amount would need to be reduced by $7,000.
So homebuyers utilizing low downpayment FHA loans who are currently prequalified should work closely with their real estate agents to identify and pursue their next home now.
Matt Evans--Keller Williams Realty, Northwest Indiana and Northern Colorado
Special thanks to Mike Forrest of Real Estate Resource Home Loans in Northwest Indiana for providing the data used in this article.
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