FHA has announced several changes in the past few weeks leading to increases in the required mortgage insurance premiums making FHA much more expensive. This will significantly impact areas such as Bethesda and Rockville MD.
There are some very good alternatives that our Rockville Community Bank offers. For loans below 417k we offer a 5% down conventional option, and for loans above the high-balance loan limits ($625,500 – DC metro area, $494,500 Baltimore metro area) we offer our 80/10/10 second mortgage option.
With the recent increase in mortgage rates and impending FHA increases it will be important to ensure that all options are considered to find out what makes the most sense. Below are two examples of way we can help save Rockville Maryland borrowers a significant amount of money with a small increase in down payment.
FHA vs. 5% down Conventional, $400,000 financed:
- 1.75% (effective after April 6) upfront mortgage insurance = $7,000 rolled into the mortgage
- $407,000 @ 3.875% = $1,914, Plus new FHA MIP (effective after April 6) = $400
- Total monthly = $2,314
5% Conventional with monthly MI
- $400,000 @ 3.99% = $1,907, Plus Monthly MI = $197
- Total monthly = $2,104
5% down conventional represents a savings of $210 per month, plus $7,000 savings from upfront MI or $17,600 over 5 years!
FHA vs. 10% down 80/10/10, $650,000 financed:
- 1.75% (effective after April 6) upfront mortgage insurance = $11,375 rolled into the mortgage
- $661,375 @ 4.00% = $3,157, Plus new FHA MIP (effective after June 8) = $785
- Total monthly = $3,942
10% Conventional with First Place Bank Second Mortgage
- $577,000 @ 4.375% = $2,881, Plus $73,000 Second Mortgage = $498
- Total monthly = $3,379
10% down 80/10/10 represents a savings of $563 per month, plus $11,375 savings from upfront MI or $45,155 over 5 years!
You can view the full mortgagee letter with all the details here - FHA MIP Changes 2012. As always we are available via phone or email to answer any questions you might have. Have a great day!