FHA Insurance Increase: Looks like Home Buyers Will Get A Month To Beat It!

By
Real Estate Agent with The Maine Real Estate Network

FHA Mortgage Insurance Premiums are going to increase, but it was just announced that home buyers will get a one month reprieve allowing them to get in before the increase.

There was a lovely message in my inbox this morning.  Josephine Nicholas of the CMPS Institute reports that home buyers now have until October 4, 2010 to use an FHA loan for the purchase of their home and avoid the scheduled increase in the mortgage insurance premium (MIP) rate.

What does this increase mean for home buyers? 

Time to buyMs. Nicholas put it this way:  "A home buyer purchasing a $200,000 home using a $193,000 FHA mortgage before October 4 would pay an insurance premium of $88.46 per month. If the same home buyer waits until after October 4, the insurance premium would jump to $148.01. In this example, the home buyer would lose $59.55 per month, or $7,146 over a ten year time frame." The monthly MIP will increase by 63%.

At the same time, the upfront premium paid by buyers will decrease from 2.25% to 1%, so home buyers who plan to be in the loan for less than three years and choose to pay the premium upfront by themselves will actually benefit from this change.  However, how many of us really know where we will be in three years?

What should I do if I am thinking about buying a home?

Call a local lender today and set up an appointment to discuss a home loan.  Ask your Realtor for a referral to a trusted loan officer.  Realtors work closely with them and can refer you to one with a successful track record.

The time to buy is now.  Give me a call and I will be happy to speak with you about your real estate goals and needs.

 

 

Posted by

The Maine Real Estate Network - Kristen Wheatley - Lewiston-Auburn Maine Real Estate

Maine Realtor Kristen Wheatley  

Kristen Wheatley is a Maine Realtor working and living in Central Maine.  She specializes in the sale of residential and investment property in the Lewiston-Auburn area and surrounding towns.  Kristen uses the latest tools and mobile technology to provide a superior experience and results for her clients and enjoys sharing these technology skills and teaching other real estate professionals and local small business owners.

The Maine Real Estate NetworkKristen Wheatley, Associate Broker
The Maine Real Estate Network
34 Center Street - Auburn ME 04210
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fha insurance premiums
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Lori Bowers
La Quinta, CA
The Lori Bowers Group

Thanks for sharing and the simple explanation. I will forward to many of my clients. It sounds like the government wants some fast cash coming into the FHA coffers?

Sep 01, 2010 10:07 AM #1
Rainer
106,910
Jay Lloyd
Cape Coral Florida - Cape Coral, FL
Allpro Home Inspection

Hi Kristen, I suggested this as a feature. I hadn't heard anything about MIP increase Oct 4th...and with so many other upfront costs to pay, most borrowers will not prepay this. jay

Sep 01, 2010 12:58 PM #2
Rainmaker
265,674
Kristen Wheatley
The Maine Real Estate Network - Auburn, ME
Lewiston/Auburn Maine Real Estate Agent

Lori:  This was good news for the moment...at least that it would be delayed a bit.

Jay:  Thanks for the suggest.  What I was told is that the MIP for FHA loans was going to go up next week, so the news that they are going to hold off for a month was quite welcome.  Yes, I haven't had anyone use an FHA loan and prepay the premium, so this will hit a lot of people.

Sep 01, 2010 02:28 PM #3
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Kristen Wheatley

Lewiston/Auburn Maine Real Estate Agent
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