Changes In FHA Mortgages; More reasons to buy and sell NOW

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Home Stager with Stage It List It Sell It

This blog was written by Mortgage Consultant, Robert Everhart, www.roberteverhart.com,REverhart@Firstrochestermortgage.com.  I always write my own blogs, but this one is critical.  Read on:

 

We have more news from DC!  HUD has introduced an increase to the Monthly Insurance Premiums (MIP) for FHA mortgages starting April 3, 2011.  The increase sets the monthly MIP at 115 bps (1.15% of the loan amount, paid out on a monthly basis) on a 30 year Note from the current 90 bps.  Your potential new mortgage payment will go up on average of $25 a month (over $30 a month on loans over $150,000) over what your payment would be today.
So what does this mean to you??  For those who are waiting for the Spring Market or are simply on the fence, $25 more a month should be a good-sized nudge.  If you are planning on getting out there and looking for your new home this spring, you may want to get moving a little sooner rather than later.  For those who missed out on the Tax Credit and wanted to wait until this year, this increase would represent over $50 more a month than last summer (HUD increased the MIP from .55 to .9 since the spring of 2010), greatly changing what your purchase point was and currently is. 
So it's only $25 more, so what.  That $25 more represents $3-5,000 less for you-less for your negotiating power, less for your purchase price, or less what you will be able to afford on a monthly basis.  This news is not entirely bad though.  This increase from the Department of HUD ensures the continued availability of an extremely popular and forgiving loan program for our clients.  By raising the MIP, HUD is rebuilding their Insurance Funds, thus allowing customers to still only put 3.5% down on their purchase of a new home (for now that is J).

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Comments (1)

Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota/Wisconsin Real Estate Expert

Good reminder. I have a couple buyers hanging out there that maybe we need to do this soon.

Mar 20, 2011 05:30 AM