Richard's Real Estate Thoughts - Chattanooga TN Mortgage Lender: February 2013

FHA Mortgage Insurance Gets More Expensive

The recent changes to FHA mortgage insurance have continued the recent trends of increasing costs for home buyers using FHA financings. Over the last few years monthly FHA mortgage insurance has been raised an annual premium of .55% to this new 1.35%. police is

 

This is a small increase above the existing level of 1.25%.

 

The real significant change is that mortgage insurance will no longer have an expiration.  With the changes in effect beginning on April 1, 2013, the FHA mortgage insurance will no longer cancel. It will remain for the loan term.  This is for all loan amounts over 90% of the property value. For loan amounts under 90% the monthly mortgage insurance can cancel after 11 years.

 

Again the most significant aspect of these new changes to the FHA mortgage insurance that for most home buyers the premium will not cancel during the loan term.

 

USDA Rural Development has a similar feature to Guaranteed Housing program with a monthly fee that does not cancel over the loan term. USDA monthly fee is less than FHA's monthly charges.

 

The purpose of these changes seems to be two fold:

1. To strengthen the FHA Mutual Mortgage Insurance Fund, which has fairly publicly been at low levels for the last few years

2. To encourage more private conventional lending. This is a goal that is not directly stated with the new changes, but the new mortgage insurance policy seems to be in line with the administration's goals of increasing private sector lending.

 

These changes do not come into effect until April 1.

 

Rates remain low. Home prices have started to show some upward pressure.

There may not ever be a better time to purchase your new home. Call me for any questions about qualifying for your new home purchase.


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Richard Smith
NMLS# 184479 TN# 104002 GA# 28928 

Conventional, FHA, FHA 203k, HUD $100 down purchases, VA,

Rural Development ( USDA), and Jumbo Loans


Lending in Chattanooga, Tennessee and Georgia for over 20 years.

Sierra Pacific Mortgage

Cell phone: 423-280-0345 Email: Richard.Smith@SPM1.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Sierra Pacific Mortgage. 

Comment balloon 2 commentsRichard Smith • February 07 2013 08:55AM
FHA Mortgage Insurance Gets More Expensive
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The recent changes to FHA mortgage insurance have continued the recent trends of increasing costs for home buyers using FHA financings. Over the last few years monthly FHA mortgage insurance has been raised an annual premium of 55% to this new 1. 35… more