Heya. Changes are aâ€™brewinâ€™ in the mortgage industry. You need to be aware of whatâ€™s happening, as it affects you directly.
Clients with FHA Case Numbers assigned on or after April 9, 2012 will see an increase to both the upfront mortgage insurance premium and the monthly mortgage insurance premium.
The upfront mortgage insurance premium (currently 1% of the base loan amount) will be increasing to 1.75% of the base loan amount.
The monthly mortgage insurance premium (currently 1.15% of the base loan amount divided into 12 months) will be increasing to 1.25% of the base loan amount.
Currently: A home with a $200,000 sales price would have a $1930 upfront mortgage insurance premium and a $182.13 monthly mortgage insurance premium.
For properties with an FHA case number assigned after 4/9/12: A home with a $200,000 sales price would have a $3377.50 upfront mortgage insurance premium and a $199.44 monthly mortgage insurance premium.
The required down payment for an FHA loan is still 3.5% and the upfront mortgage insurance premium may be financed into the loan.
There are caveats to these numbers for borrowers who wish to have a 15 year mortgage term or put more than 5% down. But nobody does that pretty much ever with FHA loans.
Let me bring this back down to ground-level: These changes are inadvertently targeted at first-time homebuyers (a huge segment of the business weâ€™re all doing these days) and is going to erode the affordability of homes for low-down payment borrowers. That means that John and Jane Doe who want a payment in a certain range will have their prospective home downsized as of 4/9/2012. Is it an earth-shattering, deal-breaking difference? Probably not. About 20 bucks per month in the above example. However, Iâ€™m sure if you have some on-the-fence buyers they would appreciate the info greatly.
Just trying to give you the ammo you need to succeed out there in this market. Let me know if you have any questions. Or any buyers who you need to get qualified.