Breaking News from FHA! Congress passed HR5981 which gives FHA the right and authority to change their monthly and annual mortgage insurance premiums, what's known as MIP, not PMI. These changes are taking place starting with and new FHA case numbers pulled September 7. This is not a contract execution date, but the date the mortgage person gets the file turned in for a case number.
What changes are planned? A decrease in the upfront Mortgage Insurance Premiums from 2.25% to 1%. This is called "upfront", but is typically rolled back into the mortgage and paid through your mortgage payments over 30 years. There will also be an increase in monthly Mortgage Insurance Premiums from .50-.55% up to .85-.90% which is determined by your combined loan to value ratio. The higher the ratio, the higher the MIP.
Here's an example chart:
|
Sales Price |
Increase in Payment |
Decrease in Upfront MIP |
|
$100,000 |
$20.07 |
$1206.25 |
|
$150,000 |
$30.10 |
$1809.38 |
|
$200,000 |
$40.14 |
$2412.50 |
|
$250,000 |
$50.17 |
$3015.63 |
What does this all mean? It means, if you're a buyer in the Austin TX area and you're still on the fence about buying, you really need to contact me today and get you off that fence! The fence is doing nothing but hurting your bum, and it must be uncomfortable sitting there for so long!!
What's going to happen next? Rates are going to start going up. Want an example of how that effects your payments?
|
Sales Price (w/3.50% down) |
Increase in Payment for every .25 increase in rate |
|
$100,000 |
$14.79 |
|
$150,000 |
$22.19 |
|
$200,000 |
$29.58 |
|
$250,000 |
$36.97 |
So, if you're buying a $200k house with an FHA loan, your payments will go up $40.14 in addition to $29.58 for just a .25% rate increase. That's an additional $69.72 a month! How many nights a month do you like to eat out? How often do you buy a $5 coffee at Starbucks? Put the money into perspective as you might have to change some of your favorite things to do in order to make up the difference.
Call me, and let's get you into a house!
**Are You Packed Yet?**
Donna Harris, REALTOR®
RE/MAX Austin Skyline
www.DonnaHomes.coma
Donna@DonnaHomes.com
Austin TX Real Estate and the surrounding areas of Lakeway, Bee Cave, West Lake Hills, Cedar Park, Round Rock, Spicewood, Circle-C, Steiner Ranch, and everywhere in between... Hill Country Austin TX Real Estate and beyond. Whether you're buying or selling an Austin home, I'll be with you every step of the way.
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** #1 Agent in my Office for all of 2008 **
Copyright© 2010 By Donna Harris, All Rights Reserved. You may re-blog with links back to this post.
* Breaking News from FHA - Mortgage Insurance Premiums are Changing * was first published on donnahomesblog.com
This is a pretty big change... good examples you provided.
Donna-Great chart. That makes the economic decision a lot easier to comprehend.
Nicely done Donna!
Donna, this is a fantastic way to let buyers know that changes are coming. Your numbers are clear and make sense. I hope it spurs some fence-sitters to action.
That's very useful information. Thanks!
Hello Donna - Thanks for the great information. I hope we don't have to pay the higher fees. We are refinancing right now!
Donna, Great Post.... You always do a great job on explaining the details. Since this change took place with the increase in the monthly MI and decrease in the upfront, I am seeing more of my clients go to a 15 year FHA. Many clients immediately think 30 year only because of the lower monthly payment but when you look at the difference in the payment it's not much. On the 15 year FHA, the monthly mi is .25 compared to .90 and then if a customer puts 10% down, there is NO Monthly MI. Big savings on interest when you cut off 15 years too! My conventional customers, I also give them the 15 year FHA option and they love it. Rate lower on FHA, cheaper closing cost since we are not dealing with a second mortgage to avoid the MI, plus it's a ASSUMABLE note. The assumable piece is big for when they go sell in five or so years when rates could be higher, the potential buyers can get the 3.500% - 4.000% going rate in today's market. The other awesome part on the FHA loan is this assumable piece is a great way to advertise the future listing in the MLS! Take care and good luck to you!
and the minimum fico is increasing to 640 -- time to get that buying done!
Great post Donna! Definitley going to reblog this one! Its worth everyone seeing it!