FHA loans -THEY ARE BACK

By
Mortgage and Lending with HomeBridge Financial Services (NJ) NMLS 248937

 UNFORTUNATELY THIS PENDING CHANGE WAS RESCINDED BY HUD 1/20/2017

Well, that title may be a little deceiving, they never really left, they just were too expensive for the past few years- and because of this we have been opting for Conventional loans more often than FHA.

FHA's first Mortgagee Letter of the year (ML2017-01) announced a significant reduction in FHA's Monthly Mortgage Insurance Premium, this change is effective for loans funding on and after January 27, 2017.

Here is the pretty chart: 

FHA MIP Chart

 Outside of the mortgage world this may be confusing, so lets put some real world numbers together:

If you were borrowing $200,000 and had the 3.5% minimal down payment, your MIP prior to 1/27/17 would be $141.67/month With this change you will drop to $100/month saving $41.67/month (That's enough to buy a few pizzas or borrow an additional $8,000)

If you borrowed $300,000: your drop would be from $212.50/month to $150/month 

This change shows a few thing (Rob's Opinion time here)...

  • FHA is losing business to Conventional loans.
  • The perceived risk must have dropped. (or else I doubt they would have decreased insurance)
  • This change will also help GNMA securities build on the quality since most lenders were only using FHA for, shall we say- "less than stellar credit" borrowers.

Now FHA will beat the typical PMI by quite a bit until the credit scores are above 740 or 760.

 

This combination of lower MIP along with typically lower interest rates for FHA VS Conventional loans is truly a big plus for low down payment buyers.  

MIP is still lifetime for most borrowers, (11yrs for some) But in reality- Very few people hold their mortgage long enough to worry about that, and in most cases "today's" PITI payment is more important than what it might be in the future.

Another Reason why 2017 is a great year to buy a home!

 

Rob


Robert Rauf 
Mortgage Loan Originator NMLS# 248937
 
http://www.homebridge.com/RobertRauf 

or my blog: http://activerain.com/blogs/rrauf 
Office: 
 
RRauf@HomeBridge.com
 
www.RobertRauf.com
 
 

Since 1987 I have been helping my clients fulfill their dream of home ownership! HomeBridge Financial Services, Formerly REMN, HomeBridge Financial Services is located at 16 Madison Avenue, Building 2 Suite 2D Toms River, NJ 08753. NMLS #6521. New Jersey Licensed Lender and Mortgage Banker #L041053. Visit www.Homebridge.com for more information. NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753, Toms River NJ 08755, Brick NJ 08723, Brick NJ 08724 Mortgage in Ocean County NJ, Mortgage in Monmouth County NJ, Jackson NJ 08527, Howell NJ 07731, Lacey 08731 08734, Beachwood Bayville , Manchester 08757 08733, Manahawkin 08050, Robert Rauf is a Licensed Mortgage Loan Originator in New Jersey.

Robert Rauf 
Mortgage Loan Originator NMLS# 248937

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Topic:
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Tags:
fha
mortgage news
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mortgage
fha changes
robert rauf
fha mortgage insurance premium
mip drops

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Rainmaker
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Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Robert, great post for our FHA loan program, and sure works for many of our buyers.

Jan 11, 2017 08:32 AM #1
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Eleanor Thorne
Equity Resources - Cary, NC
Equity Resources 919-649-5058

First TIme Home Buyers certainly apreciate the flexibility they have with FHA.

Jan 11, 2017 01:04 PM #2
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Rainmaker
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