FHA Mortgage Insurance Premium Change Affects Homebuyers Purchase Power | Colorado Springs, Colorado
If you're looking to purchase a home in Colorado, the cost of that loan will increase next month. For the third time in 12 months, the FHA mortgage insurance premium is changing. This .25% increase in fee is effective for anyone whose FHA case number is assigned on, or after, April 18, 2011. An FHA case number is assigned once an offer is accepted and the FHA appraisal has been ordered.
This change will affect you in two ways. First, the monthly mortgage payment increases. That means more cash will be required from you on a monthly basis.
As an example: If you were borrowing $100,000, the FHA Mortgage Insurance Premium change would add $250 to your annual loan fees.
Secondly, as the cost of the mortgage increases, purchasing power goes down. This means that if your debt to income was reaching the allowable limit, there is the potential for the amount of loan you are qualified for to decrease.
You should also understand that FHA mortgage insurance varies by the loan term and by the amount being borrowed compared to the lesser of the purchase price or appraised value. This is referred to as the loan-to-value.
The updated insurance premiums are listed below:
15-year loan term, loan-to-value > 90% : 0.50% per year
15-year loan term, loan-to-value <= 90% : 0.25% per year
30-year loan term, loan-to-value > 95% : 1.15% per year
30-year loan term, loan-to-value <= 95% : 1.10% per year
To avoid a reduction in the amount of loan you are able to borrow and to steer clear of any fee increase, buyers should act quickly.
To learn more: Check out our FREE Top 20 Homebuyer Secrets that can save you thousands of dollars! Plus browse our Home Buying Resources section and fill-out a free no-obligation secure online application or call us in Colorado Springs, Colorado at 719.387.1368 with any questions.
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