First time Home Buyer on the Fence? This Might Change Your Mind

Everyone

 

It appears that FHA is making changes arriving at our doorsteps on 4/1/2012.  Above is the FHA attachment from HUD.  Below is a nice excerpt from a revered Banking writer in the industry & I highly recommend you take a minute to read it.  Below is a simplified version of the change for your convenience.

 

Essentially here’s the changes:

 

  • Increase to the monthly mortgage insurance of .10 per month to our borrowers MONTHLY mortgage insurance premiums.  (IE – $200k deal/3.50% down = $16.00 increase per month/estimate)
  • Increase to the UP-FRONT MORTGAGE INSURANCE PREMIUM from 1.00% to 1.75% (IE – $200k deal/3.5% down = $1,456.00 increase to the balance of the mortgage loan/estimate UP-FRONT … on TOP of the loan amount)

 

Hope February finished strong.  Here’s to a better March.

 

 

 

As anticipated, HUD announced that mortgages backed by the FHA will become more expensive. Once again, future borrowers are paying for the problems of previous borrowers – the money will be used to bolster the sagging reserves in the FHA mortgage insurance premium fund. Hopefully any more claims that FHA is “fine” and doesn’t need more capital will stop in the near future – it does need more capital. The increase in insurance premiums would bring in about $1.25 billion during the rest of 2012 and through September 2013 which will be added to about $1 billion FHA is receiving from the servicer settlement. Every little billion helps…

 

First, remember that the agency does not make loans, or buy loans, but instead insures mortgages that meet its guidelines. Mortgage insurance, similar to a guaranty fee, protects one party from the risks of the borrower becoming delinquent of going into foreclosure. With all this talk about FHA and compare ratios, and the removal of the streamline product from the calculations, it might be helpful to know where to find it. Anyone wishing to check it out for themselves can do so through Compare. Click on the “Early Warnings” menu, Single Lender or general, and go from there. (And no, I don’t know specific lender ID’s.) If you want to see compare ratios excluding streamline refinances, they can be found through the “Analysis Menu.”

 

FHA’s guidelines are very lenient, although most lenders have overlays in order to bolster the product, and claim that borrowers with credit scores of 580 or more can put down as little as 3.5 percent. The FHA will increase its annual mortgage insurance premium by 0.10 of a percentage point for loans under $625,500, which would now cost 1.25 percent of the loan amount, up from 1.15 percent, on 4/1. And starting on 6/1 the premium for larger loans would rise more, or by 0.35 of a percentage point, bringing the total premium to 1.5 percent. This annual premium is broken down in monthly payments. The upfront mortgage premium is also increasing by 0.75 of a percentage point, bringing the premium to 1.75 percent of the loan amount, which can be financed/added into the mortgage

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About PortlandHouseListings.com - Tom Ramsey, local Realtor

Local Portland Realtor with 10 years experience specializing in residential sales and investment property. Tom Ramsey Oregon Real Estate Principal Broker John L Scott Real Estate Phone: 503-481-0501 tomramsey1@gmail.com www.PortlandHouseListings.com
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