Entry Level Buyer's Purchasing Power Increased by Over 10%

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Mortgage and Lending with Atlantic Home Loans 12937
https://activerain.com/droplet/4wmM

Coming into 2015 interest rates have declined by over .5%!  Also, The Federal Housing Administration announced that beginning on January 26 the monthly mortgage insurance (MIP) is being reduced from 1.35% of the loan amount annually, to .85%.  These two factors have increased  purchasing power by approximately 10% making NOW the time to purchase a home rather than waiting for the proverbial "spring market".  

Take the following comparison of a prospective buyer's purchasing power last fall compared to today (assuming a 3.5% down payment FHA mortgage - with a $250,000 purchase price and $241,250 mortgage plus $4,220 upfront MIP)

 

Fourth quarter 2014 (rates at 4.00% and MIP of 1.35%)

Mortgage Payment - $1,167

Monthly Mortgage Insurance Premium - $271

Annual Income needed to qualify - $72,000 (assuming the old 29% dti standard and $300 for real estate taxes and homeowner's insurance)

January 2015 (rates 3.5% and MIP .85%)

Mortgage Payment - $1,102

Monthly MIP - $170

Annual income to qualify - $65,000

Now take the home buyer who has $72,000 income and apply that to today's mortgage rate and MIP.  That same buyer's purchasing power has increased from $250,000 to $290,000 and the payment will be exactly what it would have been a few short months ago!

So if purchasing a home is in your plans for 2015, don't delay!  We are very fortunate to experience this decline in mortgage rates; it has caught even the most seasoned Wall Street investors by surprise, and likely won't last for too long!

Call today for personalized consultation and mortgage prequalification to see if this is the right time for you to purchase a home!

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Topic:
Home Buying
Location:
Rhode Island
Tags:
interest rates
mortgage rates
mortgage
fha 203k
homebuying real estate

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Rainmaker
3,171,419
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

This is a great way to explain the impact of the MIP change, George. Too many home buyers aren't getting it as yet.

Jan 17, 2015 10:08 PM #1
Rainmaker
312,800
Jeff Fisher
RE/MAX Fine Properties - Scottsdale, AZ
RE/MAX Fine Properties

Great way to explain that NOW is the time for buyers to get off that rental cycle and get into home ownership! 

Jan 17, 2015 10:58 PM #2
Rainmaker
45,730
George DeVine
Atlantic Home Loans - East Greenwich, RI
Mortgage Banker

Thanks Nina and Jeff....

Jan 18, 2015 02:15 AM #3
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Rainmaker
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George DeVine

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