In the market to buy a new home in Atlanta? If you are planning on using FHA to finance that home, due to the low down payment and favorable terms, then I suggest you move quickly.
You see, HUD announced that as of April 18, 2011 there will be a significant increase in the annual Mortgage Insurance premium. In order to further bolster FHA’s financial strength and ensure that they can continue helping homeowners, HUD will increase the monthly mortgage insurance premium by a .25 point. Right now, when a home buyer puts 3.5% down on an FHA loan, the buyer will pay a monthly mortgage insurance premium of .90. For new case numbers assigned on or after April 18, 2011, the monthly mortgage insurance rate will rise to 1.15.
Let’s take a look at how this will affect a buyer’s monthly mortgage payment. If a buyer was purchasing a $200,000 home today and using FHA financing, they could expect to pay $144.75 for the monthly mortgage insurance. After this new change takes place, they will now pay $184.96 in monthly mortgage insurance which is a $40.00 increase in their payment.
Here is the increase shown from HUD’s mortgagee letter, based on a $163,000 sales price:
Remember, as with any changes that are made to the mortgage insurance premiums, they are effective the date the case number is pulled and NOT the date the contract is accepted. So, my advice is to have the case number pulled if you are in negotiations and it looks like your contract will be accepted around the mid-April timeframe so you ensure you will receive the lower monthly MI rate.
Inventory is high and rates are low – it’s a great time to buy. Let’s get those contracts in and case numbers ordered before April 18, 2011!