If you’re thinking about buying a home and are a FHA buyer some changes are coming in April that you should be aware of. It’s going to cost you more so you might want to think about getting off the fence and getting into escrow! There will be a .25% increase of the FHA Monthly Mortgage Insurance (MMI) effective with FHA Case Numbers obtained starting April 18th, 2011.
New rates are as follows:
>95% LTV: .90% becomes 1.15%
<95% LTV: .85% becomes 1.10%
>90% LTV: .25% becomes .50%
<90% LTV: -0-% becomes .25%
On a $300,000 loan amount this equates to an increase of $62.50 per month in payment. This will impact the qualifying amount for your buyers and the buyer pool for your listings that attract FHA buyers.
At this time there is no change to the 1.00% upfront mortgage insurance premium (UFMIP) or to the 3.50% minimum down payment although there is always talk of changing these as well as HUD ( in the words of FHA Commissioner David Stevens) “is working to bolster their reserves and to help private capital return to the housing market.”
Even with this increase, FHA loans remain the most cost-effective mortgage insurance option for borrowers with lower incomes and lower down payments. Again, loans must be submitted to lenders and case numbers pulled prior to 4/18/2011 to avoid the increased MMI. Lender terms may vary. Please contact me if you have any questions!