Financing A Home In Sacramento - FHA UPDATE
Financing A Home In Sacramento - FHA UPDATE
Buying a home in Sacramento? There are anticipated changes in FHA financing that make a home purchase just a bit more difficult...and expensive. While these changes are not earth shattering, they are not making home buying easier, faster or more affordable...at a time when we want and need more buyers.
Much of the real estate market in subdivision intensive areas like Elk Grove, Natomas, Roseville and Folsom consists of first time home buyers already stretching themselves as it is.
My friend Ray Saenz recently commented on one of my blogs and suggested that I do an update on the upcoming Changes To The FHA Upfront Premium and Monthly Mortgage Insurance Premium. This is a major change for FHA, and will have a significant impact on a Borrowers ability to qualify for a mortgage.
The new Monthly Insurance Premium will go from a .55 multiplier to a .85 for LTV's of 95% or lower, and .90 for LTV's over 95% This means that the Monthly payment will change from $46.49 to $76.08 per every $100,000 on a loan. That is a difference of $29.59 on every $100,000, and could mean the difference a Borrower being able to qualify for a FHA or CHFA Mortgage in Connecticut. This may look on the surface like not much, but as the loan goes higher and higher, so does the difference in the Monthly Mortgage Payment. The Monthly Mortgage Payment on a $150,000 house now becomes $43.54 and on a $200,000 an increase of $59.18. A Borrower might be able to qualify for a Mortgage under the existing Monthly Insurance Premium, but not under the new. The Upfront Premium will go down from 2.25 points to 1.00 point, but his amount is rolled into the overall Mortgage and will represent a minimal impact to the monthly Mortgage payment.
The new Changes To The FHA Upfront Premium and Monthly Mortgage Insurance Premium. Will go into effect on Monday October 4th, and will apply to all FHA Case Numbers that will be issued on or after that day. It is important to remember that the change is based on the day the FHA Case Number is obtained and not the day of the Mortgage Application. One might say what is the difference? The difference is that on many occasions there is already a FHA Case Number on a property, and that FHA Case Number needs to be cleared before another FHA Case Number can be issuedon the same property. This means the Lender that obtained the previous FHA Case Number needs to cancel it with FHA before the new Lender can obtain one. This could take days depending on how quickly the first Lender acts on the request.
Another cause for a delay in obtaining an FHA Case Number is when the Borrower is trying to do an FHA Mortgage with one Lender, and that Lender for whatever reason is not able to do the Mortgage. If the Borrower then goes to a different Lender to try to obtain a Mortgage on the same property, the FHA Case Number will have to be transferred to the new Lender. This will actually present a second problem, because since it is still the same FHA Case Number it will continue to apply even though the change in Lenders is after October 4th. This will present issues with the disclosure of the Good Faith Estimate (GFE).
You need to be mindful of this Changes To The FHA Upfront Premium and Monthly Mortgage Insurance Premium, and if possible even be a little pro-active. If a Borrower is making an offer on a property within the next week, ask if anyone has tried to do an FHA Mortgage on the property previously. If so ask the Listing Agent to contact the previous Lender and start the process to clear the FHA Case Number. If you are a Listing Agent and have a property that had an FHA Case Number previously issued, take it upon yourself to contact the previous Lender and have them clear the FHA Case Number even though you do not have a new offer yet.
If we are all on top of the new Changes To The FHA Upfront Premium and Monthly Mortgage Insurance Premium, we can eliminate last minute surprises that could possibleblow a purchase apart. As mentioned in the beginning of this blog, a Borrower might be able to qualify for a Mortgage under the existing Monthly Insurance Premium, but not under the new. If we all work together we can make this transaction a smooth one and not put our clients through needless stress.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308, gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.
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