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Home Buyers and the FHA

Many years ago we used to think that anyone who bought a house using an FHA loan was a bad credit risk or a first time home buyer with limited resources. Although that really was not true that was the prevalent thinking at the time. Today FHA loans may be the way to go. The interest offered are great and there are several programs available. However on July 14,2008 the upfront and annual mortgage insurance premiums associated with FHA loans will be restructured.
What does this mean for you? It could possibly mean higher and more expensive mortgage insurance. The amount of upfront fees and monthly mortgage insurance premium you pay will be based on your credit score, loan length and loan to home value. The formula is becoming more risked based. This is the result of the recent debacle in the mortgage industry.
What can you do to avoid this increase in costs? First of all you can buy before the new formulas go into effect. That means finding and closing on a home no later that July 13, 2008. The other option is to raise your credit score to 680 or above and buy after the new rates go into effect. Both of these options are viable. If you aren't sure how drop me an email and I will explain.
If you really want to read the Federal Register issued by the Department of Housing and Urban Development dealing with the subject here is the link: http://edocket.access.gpo.gov/2008/pdf/E8-10625.pdf
Thanks and I hope you have a great day.
Ron

Posted by Ron Wickes on 05/15/2008 12:20 PM

Comments (2)

montgomery county, montgomery texas, lake conroe, real estate, credit restoration, credit repair, conroe

2 Comments on Home Buyers and the FHA

Ron:

Great information and very timely post. Thanks for keeping us updated.

05/18/2008 02:54 PM

by Alan Kirkpatrick Austin Texas Real Estate (Austin Texas Homes)

One of the Great Things about FHA is that the interest rates themselves are not Credit Score Drive (as is many conventional products) - only the MI roll in and monthly factors are adjusted. The maximum monthly MI moved up slightly from .50% to .55%.; the roll in is from 1.25% (better than before) up to as much as 2.25%.

See the table below:

Upfront MIP and Annual MIP for Loan Terms > 15 Years
LTV	Credit Score
LTV	850 - 680	679 - 640	639 - 600	599 - 560	559 - 500	499 - 300	Non-Traditional
> 95.01%	1.25% / 0.55%	1.50% / 0.55%	1.75% / 0.55%	2.00% / 0.55%	2.25% / 0.55%	N/A	2.00% / 0.55%
95% - 90.01%	1.25% / 0.50%	1.25% / 0.50%	1.50% / 0.50%	1.75% / 0.50%	2.00% / 0.50%	N/A	1.75% / 0.50%
< 90%	1.25% / 0.50%	1.25% / 0.50%	1.25% / 0.50%	1.50% / 0.50%	1.75% / 0.50%	1.75% / 0.50%	1.50% / 0.50%
Upfront MIP and Annual MIP for Loan Terms < 15 Years
LTV	Credit Score
LTV	850 - 680	679 - 640	639 - 600	599 - 560	559 - 500	499 - 300	Non-Traditional
> 95.01%	1.25% / 0.25%	1.50% / 0.25%	1.75% / 0.25%	2.00% / 0.25%	2.00% / 0.25%	N/A	2.00% / 0.25%
95% - 90.01%	1.00% / 0.25%	1.25% / 0.25%	1.50% / 0.25%	1.75% / 0.25%	2.00% / 0.25%	N/A	1.75% / 0.25%
< 90%	1.00% / 0%	1.00% / 0%	1.25% / 0%	1.50% / 0%	1.75% / 0%	1.75% / 0%	1.50% / 0%

I hope this makes sense for everyone.. The biggest problem now is all of the origination prgrams that lenders use will take some time to get the adjustments set to work properly.

07/14/2008 04:24 PM

by Baine McClure (Countrywide)

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