While these changes may not make mainstream news, or whether "the mainstream" understands what it means, the recently approved changes to FHA can affect YOU.
First-time buyers, as well as move-up and move-down buyers can all take advantage of FHA loans. They offer good rates, and are a bit more lienient than other loans with regards to debt-to-income ratios. Of course, FHA loans also require mortgage insurance--both an up-front fee and monthly fees.
Right now, up-front fees are 2.25% of the loan value. This fee will be LOWERED to 1% (nice!). The monthly mortgage insurance fee will increase from .55% to .9%, which will increase a buyers payments by approximately $30 per month on a $100,000 loan.
These changes are scheduled to begin with October 7, 2010.
WHAT THIS MEANS TO YOU: A buyer's monthly income will have to be a bit higher to qualify for the same purchase price.
REMEMBER: To everyone who is paying mortgage insurance, once you reach 80 or 85% loan balance to home value, you can probably have your mortgage insurance payment removed. Contact your lender for specific details--because I'm sure you can find something else to do with that extra money!
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