Well everyone, there have been some significant changes with regard to FHA financing as of late. Effective April 5, 2010, FHA will collect an upfront mortgage insurance premium from 1.75% to 2.250% (financed) for all Purchases. Down payment remains at 3.5% and monthly mortgage insurance remains unchanged (.55).
Example:
OLD:
Sales price of $200,000, with 3.5% down payment, base loan $193,000 (upfront MIP $3377.5) total loan amount $196,377
Monthly principal & interest: $1054.19 with a 5% 30 Year Fixed Rate
NEW:
Sales price of $200,000, with 3.5% down payment, base loan $193,000 (upfront MIP $4342.50) total loan amount $197,342
Monthly principal & interest: $1059.37 with a 5% 30 Year Fixed Rate
It looks like FHA is trying to stave off some of the financial losses they have been incurring as of late with the large number of FHA loans that have defaulted.
NOW FOR THE GOOD NEWS… FHA is trying to allow for quick resale of foreclosed properties. Previously, properties that had been owned for less than 90 days by the current owner were not eligible for purchase with an FHA loan. However, with a large number of area homes being purchased, renovated and placed on the market for resale in under 90 days, FHA buyers were missing out on some real gems. This also adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.
FHA has tempoarliy suspended this policy, effective February 1, 2010 for one year. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.
YEAH!
If you’d like to discuss in detail, free free to IM me with the IM box up top, email me at justin@justindibbs.com or you can always call (703) 930-5800 