Real Estate Agent with Dyer-Walker Real Estate 01273104



For FHA, Loans Mortgage Insurances is needed because down payment is only 3.5%. Therefore the remaining loan requires Mortgage Insurance. Now, some of you are saying, "What is Mortgage Insurance and why do I need it?"

"Mortgage insurance, is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. It can be either public or private depending upon the insurer. "

What do you need to know?

Coming October 4th, Upfront Mortgage Insurance Premiums cost is going DOWN from 2.25% to 1%!!!  These are a part of your closing cost.

For Example, if your purchase price is $250,000, under the current upfront cost is for Mortgage Insurance Premium is $5,625. Under the NEW plan your upfront cost would be $3,125, giving you a $2500 in savings in closing costs.  Nice Uh?!

Now, what is changing is the "Annual Mortgage Insurance...."

The Annual Mortgage Insurance Premium is going from .55% to .90% for 96.5% loan to value over a 15 mortgage or more. This is for you buyers who are using FHA for financing with only 3.5% down.

Again, for example, on a $250,000 purchase price w/ a 4.5% interest rate is approximately $1267 + 114.58 with the current mortgage insurance premium=1381.58 payment. After October 4th it will be $1267+187.50=1381.58 payment.

Yes..., your payment will have a slight increase, but only 60-$80 a month; and it will increase your debt to income ratio, which means your purchase power will be slightly less. Estimates will vary. Make sure to consult your loan officer.

However, if you're on the fence about that property, make a decision before guidelines change AGAIN! As you can see lending is always changing. Please consult your loan officer for details. And tell them to register your FHA loan before Oct. 4th!


Comments (4)

Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Changing all the rules and changing programs does not help the market.  Consistancy does.

Sep 28, 2010 07:10 PM
Jordon Wheeler
The Jordon Wheeler Group - Fairburn, GA
J W Group Real Estate Sales and Service

Erika - Very relevant and timely information!  Thank you for the examples that make it easier for a buyer to follow and understand.  Best of success to you!

Sep 28, 2010 07:13 PM
Erika Walker
Dyer-Walker Real Estate - San Marcos, CA
"Selling Real Estate with a Touch of Class"

Amen Tim!!! Somebody call Somebody and tell them that! We're down here dealing with it! 

Sep 28, 2010 07:13 PM
Erika Walker
Dyer-Walker Real Estate - San Marcos, CA
"Selling Real Estate with a Touch of Class"

Hi Jordon! Your Welcome! My loan officer sent me an email, and I had 1000 questions! I figured I had to read several articles for myself to break it down! I ready why, but for buyer's that's not important.. the complete why.. just the nuts and bolts!

Sep 28, 2010 07:15 PM