FHA Increases Their Up Front and Monthly Mortgage Insurance Premiums April 1 2012 - How Does it Effect You?

Reblogger Margaret Rome Baltimore 410-530-2400
Real Estate Broker/Owner with HomeRome Realty 410-530-2400 311291

This is a wonderful time to purchase a home. And here is another reason to start the process this month! Donna explains how you can save money if using an FHA mortgage.

Please take time to comment on Donna's well written post.

                                          410 530 2400

Original content by Donna Harris 0480809

In today's real estate market, many buyers are opting for the FHA route for obtaining their mortgage. FHA loans are different from Conventional loans in many ways, mainly an FHA loan is a Government loan that only requires a 3.5% down payment and a Conventional loan isn't, and it requires a minimum of 5% down payment.  Last year, the fees and Mortgage Insurance Premiums (MIP) had a change in their calculations. This caused many home buyers to be priced out of the market with their payments going up considerably.

As of April 1, 2012, FHA has yet again, changed their fees and MIP calculations. This change shouldn't price people out of the market, but there is a difference in payments that will make people say, "I'm paying how much more for the same house because of fees?"

After April 1, 2012, the Up Front MIP will go up to 1.75% of the loan and the Monthly MIP will be calculated on 1.25% of the loan.  What does this mean?

At $150,000 - Today's 3.875%, the mortgage payment will increase approximately $18.

At $200,000 - Today's 3.875%, the mortgage payment will increase approximately $24. 

At $250,000 - Today's 3.875%, the mortgage payment will increase approximately $31.

You might think it's not that big of a deal for an extra $20 here or $30 there, but it's a MONTH!  That's $240 here or $360 there a year!  It adds up. Now, multiply that out over 30 years.  My daughter's dance class is $700 a year, and her swim lessons that she's starting in a couple of weeks are $780 a year. I'm struggling to justify those expenses as she's only 4. The increase is about half her dance class. Do you have kids doing extracurricular activities? How much do they cost, and will this increase impede into that budget?

After April 1, 2012, you don't have any choice but to accept these terms if you're obtaining an FHA loan. However, prior to that date, you have a choice. As long as you start the loan process prior to April 1, you're in the clear. You do NOT have to close on a house prior to April 1.  That means, if you're thinking of buying a house in the next couple of months, and you're going to go the FHA route, you need to get pre-approved for your loan in the next month. Today is March 1 and there are 31 days in March. Let's get going! Get off the fence and keep some extra money in your pocket instead of waiting until after this important deadline!

If you're looking to buy a house in the Austin TX area, please contact me TODAY so we can get you approved now!

**There are other changes that effect other markets with loan limits over $625k, but the Austin area has a max FHA loan limit of $277k, so those higher priced issues do not effect my market.

**Are You Packed Yet?**

donna harris Realtor Austin TX blog

Donna Harris, REALTOR®
RE/MAX Austin Skyline
www.DonnaHomes.com

Donna@DonnaHomes.com
austin-texas-homes-for-sale.com

Austin TX Real Estate and the surrounding areas of Lakeway, Bee Cave, West Lake Hills, CedarPark, Round Rock, Spicewood, Circle-C, Steiner Ranch, and everywhere in between... Hill Country Austin TX Real Estate and beyond. Whether you're buying or selling an Austin home, I'll be with you every step of the way. 

For real time Austin TX listings,click here.

** Multi-Million Dollar Producer Year after Year **

** Platinum Top 50 Finalist 2011 out of almost 9000 agents in Austin TX**
** Five-Star Professional 2011 **
** RE/MAX 100% Club **

Copyright© 2012 By Donna Harris, All Rights Reserved. You may re-blog with links back to this post.
*
FHA Increases Their Up Front and Monthly Mortgage Insurance Premiums April 1 2012 - How Does it Effect You? * was first published on donnahomesblog.com.

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Ambassador
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Nice re-blog Margaret - though I was aware that some changes are coming, Donnas has spelled it out - and that helps the buyers.

Mar 02, 2012 12:44 PM #1
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Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

Margaret every bit counts so anyone thinking of buying a home using FHA would be wise to lineup their mortgage this month.

Have a great weekend.

Mar 02, 2012 09:12 PM #2
Rainmaker
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Alan Gross
PrimeLending, A PlainsCapital Company, Equal Housing Lender - Bethesda, MD
Loan Consultant

It amazes me that in the middle of a housing crisis when the government is trying to get the housing market back on track it raises the FHA MIP rates again. FHA is one of the few options borrowers with limited cash have to get into housing market. I'd like to see the statistics that show this increase is necessary.

Mar 02, 2012 09:36 PM #3
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Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
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Praful, Jennifer and Alan,

Donna did a good job with her explanation. Go over to her blog and tell her.

Mar 03, 2012 01:23 AM #4
Rainmaker
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Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator

Thank you for the reblog Margaret. More people need to know this information!

Mar 03, 2012 10:08 AM #5
Rainmaker
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Bridget "Mortgage Mama" McGee
SWBC Mortgage 410-960-2061 - Baltimore, MD
Maryland Mortgage Mama NMLS#196068

It is important to note that the buyer must be under contract for a home PRIOR to April 1st to "beat" the increase.  An FHA case number can't be assigned until there is a property and a loan application in process.

Maryland Mortgage Mama

Mar 03, 2012 10:28 AM #6
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William Johnson
Retired - La Jolla, CA
Retired Real Estate Professional

Hi Margaret, this is a terrific re-blog and glad to see this. While these numbers don't look catastrophic while rates are at the low levels  but we all know that those rates will be going up in months and years to come and this will be enough then to disqualify or at least be a much bigger deterrent. We don't need to increase deterrents we need to increase incentives and simplify the process.

Mar 03, 2012 10:46 AM #7
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Margaret Rome Baltimore 410-530-2400
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Donna, Good information and well written.

Bridget, Even more reason not to wait to put in an offer!

William, You are so right. Where are the incentives to encourage home ownership?

Mar 03, 2012 11:35 AM #8
Rainmaker
526,160
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Raising the cost lowers the buying power of buyers which in turn reduces the value of houses which causes more homeowners to be deeper underwater on their mortgage which causes more foreclosures.

Mar 04, 2012 11:00 AM #9
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