Kalamazoo Real Estate – February 17, 2013 – The Veenstra Team is alerting all home buyers who might need to obtain FHA financing that they should try to get an accepted offer over to their lender prior to April 1st, 2013 to avoid the increase in FHA fees that will go into effect on April 1!
If you are able to put 5% down and get a conventional loan you will avoid the high mortgage insurance associated with FHA financing.
Also, we understand that there will be a new conventional loan product coming into the market place soon that will allow for a 3% down payment and will have lower mortgage insurance premiums than those outlined below but your credit score will need to be higher than the FHA loan. Remember that credit scores can be improved, sometimes within short time frames. We can provide a recommendation to a lender (and, if necessary, a credit counselor that does great work) that will be very helpful if you need a bit of work done on your credit.
Here are the details and implications on the increases in FHA fees coming April 1 and announced by the Federal Housing Administration last Wednesday. They believe that the series of changes they will be implementing will strengthen the Mutual Mortgage Insurance Fund and improve risk management. According to lender Amerifist, “Most of the changes were outlined last fall in the wake of the FHA Actuarial Report showing the MMI Fund with a negative economic value. Among the changes, FHA will:
- Increase its annual mortgage insurance premium (MIP) for new mortgages for case numbers assigned on or after April 1:
- by 10 bp for all 15-year, and all 30-year less than $625,500 – what this means is on a 150k loan the payment would go up $12 per month.
- adds a new 45 bp annual premium for 15-year loans with LTVs less than 78% (previously, these loans had no annual MIP, now on a 150k loan a borrower would pay $56 per month)
- Require most FHA borrowers to continue paying annual premiums for the life of the loan, effective for case numbers assigned on or after June 3:
- loans with LTVs > 90%, MIP will be for the life of the loan
- loans with LTVs <= 90% MIP will remain in force for 11 years This is the big change as it means most borrowers will never get out of paying the mortgage insurance which current drops off when the loan reaches a 78% LTV and they have been paying it for 5 years. Although statistically most borrowers are not in a mortgage more than 5- 7 years with rates at historic lows this time frame is expected to increase. On a 150k loan a borrower would pay $168 per month for mortgage insurance the entire life of the loan.
So the bottom line for Kalamazoo home buyers is that they should contact the Veenstra Team NOW to start the home purchase process and hopefully beat the FHA increase OR to let the Veenstra Team connect them to people that will help them improve their credit score to be able to qualify for the new 3% down loan that will be coming soon.
First time home buyers should also recognize that the $3000-$5000 grant will expire when the money is gone! We can explain all the details, but it pays to move ahead NOW! Call us at 269-350-5514
Your Kalamazoo REALTORS, The Veenstra Team