Caroline Ashe Your Source in Augusta, GA Real Estate March 28th, 2013
If you are a lender, a realtor or a buyer you have heard about the new FHA Loan increases for the loan’s PMI or private mortgage insurance. These new FHA loan increases begin April 1, 2013 so get ready, prepared and know the facts. Below I have added a few slides from a presentation I attended at Augusta Mortgage. Good stuff!
In straight talk the PMI on an FHA mortgage will be increased by 10 basis points on the annual premium term. What does that mean? I don’t really know because I leave that to the loan officers, but on a $100,000 sales price with a loan amount of $96,500 ($100,000 minus 3.5% down payment) the increase in payment is $7.97 per month which equals 2 less stops at Starbucks a month! Small price to pay for the American Dream.
I’ve been asked the questions WHY? is this happening… In order for the FHA mortgage to be available there must be so much capital in reserve, per the government policy. Well the FHA is in the negative and needs to raise money to keep the most affordable home loan on the market available to eager buyers looking to purchase a home! FHA mortgage requires the smallest down payment (3.5%) and is not as strict on credit scores. FHA loans are good for buyers, sellers and the general economy, as we’ve all seen how important the housing market plays in the overall health of our economy.

New FHA Mortgage Increase

New FHA Mortgage Increase
The other BIG change is the length of time the annual mortgage insurance premium is collected on FHA mortgages. In the past after your FHA loan reached a loan to value of 78% or less the mortgage insurance would drop off and your monthly payment would decrease. Well…say bye bye to that with this new change that takes effect June 3, 2013. For most FHA buyers, in my opinion, this will not have that much effect seeing as most buyers move every 5-10 years on average. The time for the loan-to-value to reach 78% or less is approx. 5 years. The change to remember is if you only have a down payment of 10% or less the mortgage insurance will be on the FHA loan for the life of the loan term. See the illustration below for explanation of 15 and 30 year mortgage terms.

New FHA Mortgage Increase
Questions, comments, complaints? Connect with Caroline Ashe online at www.CarolineAshe.com or call 706-589-1360
Tags: FHA, FHA Mortgage increase, FHA mortgages, mortgage, real estate