FHA Mortgage Insurance Premiums to Increase... AGAIN!

By
Mortgage and Lending with Bay Equity LLC. Georgia Residential Mortgage Licensee. GA-MLO 40074. NMLS ID 200401. 200401

The U.S. Department of Housing and Urban Development (HUD) is at it again.  For the second time in just six months, FHA will be increasing their mortgage insurance premiums.  As of April 18, 2011 home buyers that were going the FHA route may not be able to buy as much home.  Even if qualifying ratios aren’t an issue, monthly payments for an FHA loan will definitely become more expensive.

The annual insurance premium, currently ranging from .85% to .90%, (depending on the down payment) after April 18th will range from 1.10% to 1.15%.  

Craig Berry educating other on FHA MIP changes

PRE - April 18, 2011

Purchase Price:  $200,000

Down Payment:  $7,000 (3.5%)

Interest Rate:  4.75%

Principle, interest and mortgage insurance payment:  $1,163.05

POST - April 18, 2011

Purchase Price:  $200,000

Down Payment:  $7,000 (3.5%)

Interest Rate:  4.75%

Principle, interest and mortgage insurance payment:  $1,203.66

As you can see from the example, the payment will be over $40 per month higher come April 18th.  If the home buyer’s debt ratios are already tight, purchasing power could once again be affected by roughly $10,000.

The spring market has arrived and there are many sellers who’ve been waiting until now to put their homes on the market.  If you’re in the market to buy a home this spring (or summer for that matter) and there’s a possibility that an FHA loan will be your best alternative, you have until April 18th to get under contract and get your loan application started.  There’s a good chance that you can find your dream home, get under contract, and avoid the payment increase but only if you get moving! 

Is any of this confusing?  Have questions?  Need help trying to get pre-approved to buy a home but don’t know where to begin?  Call, email or text me today… I can help! 

 

Comments (1)

Frances C. Rokicki
Fran Rokicki Realty, LLC - Bolton, CT
Broker-Mentor,CRS

Craig, I cannot even believe that they are doing this.  It will affect the first time homebuyer the most.  The Sellers will feel it, also.  To qualify for the mortgage, the buyers will need to negotiate a lower purchase price on the home.

Mar 22, 2011 01:02 PM