The Cost of FHA Financing is Going to Increase!

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Real Estate Agent with TIM LORENZ - Elite Home Sales Team DRE# 00919781
https://activerain.com/droplet/x2K

The Cost of FHA Financing is Going to Increase!

 

FHA has recently announced that "as part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration's (FHA) Mutual Mortgage Insurance Fund" a new premium structure will go into effect.

Beginning April 1st, 2012, FHA will increase its monthly mortgage insurance premium as well as the upfront mortgage insurance premium.

 

On June 1st, 2012, there will be an additional increase of the monthly mortgage insurance premium for the high balance areas.

Currently, the upfront mortgage insurance, the amount added to the loan amount, is 1.00%. As of April 1st the new upfront mortgage insurance will increase to 1.75%. As an example, on a loan amount of $400,000, the current 1.00% equates to $4,000. After the increase goes into effect the new amount based upon 1.75% equates to $7,000. This increase will essentially add an additional $13 to the monthly payment.

 

The current monthly mortgage insurance premium is 1.15%. On April 1st it will be increased to 1.25%. On a $400,000 loan amount the monthly premium will increase from $383 to $416, or $33 a month more. Add this to the $13 from the upfront increase it totals $46 extra the borrower will be paying for FHA financing on a $400,000 loan amount.

 

As they say on TV, "Wait, there's more!" Effective on June 1st, FHA has announced that loan amounts greater than $625,500 up to and including the maximum loan amount of $729,750, the monthly mortgage insurance premium will increase another .25% to 1.50%. The government feels these buyers can afford more.

 

As an example using a $700,000 loan, the current monthly premium is $670. Effective April 1st, it will increase to $729, an increase of $59. When the June 1st premium increase takes effect, the monthly premium for the $700,000 loan will increase to $875 which is $205 more from where it stands today.

 

If you have borrowers on the fence about purchasing a home, I highly suggest you share with them the cost of financing is about to go up and to take advantage of the terms currently available to them.

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Rainmaker
854,389
Elite Home Sales Team
Elite Home Sales Team OC - Corona del Mar, CA
A Tenacious and Skilled Real Estate Team

Thank you for the info. We all need to know what is happening with loans.

Mar 05, 2012 10:48 AM #1
Rainmaker
1,143,971
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Yeah its so wrong. The feds run all the competition out of business (isnt that called a monopoly for any entity? other than our government that is) then they realize they dont know what they are doing and they want private markets to come back to the arena they were just run out of and now they take at these literally absurd levels?

All I can say is VOTE and now more than ever do we need CHANGE!

Mar 05, 2012 10:54 AM #2
Rainmaker
390,596
Kona Home Team (luva llc) Lance Owens (RS)
Kona Home Team (luva llc) - Kailua-Kona, HI
Getting transactions done, when nobody else can!

You have some great information here Tim, I am going to share it with my clients also. I hate to see it go up in this economy, but they need to start covering costs also - I guess ? 

Mar 05, 2012 12:32 PM #3
Rainmaker
637,894
Maria Morton
Chartwell Kansas City Realty - Kansas City, MO
Kansas City Real Estate 816-560-3758

Tim, the FHA changes are going to kick out a few buyers just barely able to buy. Look for more charges and increases over the next 2 years.

Mar 05, 2012 01:22 PM #4
Ambassador
2,371,653
Fred Griffin Tallahassee Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

The Wall Street Elitists must need some more Bonus Money.  

  Hit the little guy; they are always good for a few more bucks.    :(

 

 

Mar 05, 2012 01:25 PM #5
Rainmaker
1,022,703
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Mark glad I could help.

 

Mar 05, 2012 02:46 PM #6
Rainmaker
1,022,703
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

US Mortgage

This is what is going on and we are suppose to get in line.

Mar 05, 2012 02:47 PM #7
Rainmaker
1,022,703
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Lance

Thank you for the complement.

Mar 05, 2012 02:48 PM #8
Rainmaker
1,022,703
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Maria

Yes they will kick out some at the business.

Mar 05, 2012 02:48 PM #9
Rainmaker
1,022,703
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Fred

It is true that the government is hurting the little guy.

Mar 05, 2012 02:50 PM #10
Rainer
206,584
Marge Piwowarski
Phoenix AZ Horse Property - Phoenix, AZ
Phoenix AZ Horse Property, LLC

Hard for the market to recover with qualification becoming harder each day!

Mar 06, 2012 11:16 AM #11
Rainmaker
184,793
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland

More buyers will get back on the fence because they will not be able to afford it.

Mar 07, 2012 09:48 PM #12
Rainmaker
1,022,703
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Marge

You are correct.

Mar 07, 2012 11:00 PM #13
Rainmaker
1,022,703
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

With the housing market so uneasy it is not good to make it more difficult to purchase a home.

Mar 07, 2012 11:01 PM #14
Rainer
24,117
Tammy Adams
Birmingham, AL

Tim, HUD has to raise more money not because of foreclosures (as many would have you believe), but because HUD is bleeding money for programs to house the homeless. I'm not saying this is good or bad, but it seems to be a misappropriation of funds in my mind.  The mortgage insurance premiums were meant to stay in the mortgage pool to pay out losses on mortgages.  If an life or property/casualty insurance company did the exact same thing HUD is doing, they would be HEAVILY penalized. 

Think this is bad? Take a look at the newest proposal to hike the GSE's fees to help pay for the BP oil spill in the Gulf of Mexico.  Seems to me like home buyers and homeowners should not be responsible for paying to clean up BP's mess.  Call me crazy, but I think Richard Shelby should be ringing BP's phone for more clean up money instead of all of us home owners.

Anyway, thank you for the post and bringing this to everyone's attention.  I think the real estate market will see a slight bump in sales if more agents can get this word out quickly to the public.

Mar 13, 2012 12:46 PM #15
Rainmaker
1,022,703
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Tammy

You are exactly correct.  This administration is redistributing the wealth.  So we can all be poor.  They pick the winners and losers.

Mar 13, 2012 03:36 PM #16
Rainmaker
499,122
Daniel J. Brudnok, REALTOR
Berkshire Hathaway Home Services Fox & Roach, REALTORS - Exton - PA License #RS-225179-L / Delaware License #RS-0025038 - Downingtown, PA
SRES, e-PRO,ABR,GREEN,CSP

Tim,

I saw some of the changes and low and behold a few on the fence Buyers now need my undivided attention.....YIPPEE!

Mar 17, 2012 04:26 AM #17
Rainmaker
1,022,703
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Dan

I hope things are a changing.

Mar 17, 2012 05:48 AM #18
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Tim Lorenz

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