When it comes to mortgages, one piece of important news got little fanfare. The Federal Housing Administration announced that it will charge higher mortgage insurance premiums to riskier borrowers and lower premiums to safer borrowers, starting in mid-July.
This will actually be better for good credit borrowers. Right now, the FHA charges the same to everybody in its most popular program. Everyone pays an upfront mortgage insurance premium of 1.50% and in addition to that, an annual mortgage insurance premium of 0.50% calculated on the base loan amount, which is paid monthly in the housing payment.
For example, on a base loan of $100,000, the upfront FINANCED mortgage insurance premium is $1,500 (making the total loan $101,500) and the monthly mortgage insurance premium is about $42.
FHA has always charged the same upfront mortgage insurance and monthly mortgage insurance premium on all FHA loans. STARTING JULY 14TH, THE PREMIUMS WILL VARY, DEPENDING ON CREDIT SCORE AND LOAN-TO-VALUE RATIO.
For example, someone with a "low" credit score of 580, borrowing more than 95% of the home's value will pay an upfront premium of 2% and an annual premium of 0.55%. This will be more than FHA borrowers in this credit range are paying now.
People with "higher" credit scores will benefit, though, because their premiums will go down. Borrowers with credit scores of 680 or above will pay an upfront mortgage insurance premium of 1.25%. The annual mortgage insurance premium will remain at 0.50%. Those people borrowing more than 95% of the home's value, will be paying 0.55% annually.
According to FHA commissioner Brian Montgomery, nearly 25% of FHA borrowers have credit scores of 680 or higher. Of that 25%, most of the borrowers are putting down the minimum down payment of 3%. It appears that 75% or more of FHA borrowers will be experiencing a change in the cost for FHA financing.
Mortgage Rate Trend
The results are almost evenly split: 40% of the mortgage experts think rates will rise, 30% think rates will remain unchanged and 27% think rates will go down. No strong trend is evident.
If you have questions about FHA financing or buying a home in the Mid-Willamette Valley, please call:
Leslie Stewart, Realtor, CRS
The Brenda Bonebrake and Sandy Edwards Team
Licensed Broker in the State of Oregon
Prudential Real Estate Professionals
1155 First St, Stayton OR 97383 503-769-3448 800-423- 7740 LeslieS@prurep.com
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Mary, Cyndi, Brenda, Sandy and Leslie