Texas Mortgage & Real Estate Thoughts

Its only a week away for yet another change which will effect home buyers.

A few weeks back, it was announced within HUD Mortgagee Letter 2011-10 that there would be an increase in the Annual Mortgage Insurance Premium for all new FHA Case Numbers assigned on or after April 18, 2011.

If you recall, there were changes to the Mortgage Insurance Premium back in October 2010 which changed the UFMIP (UpFront Mortgage Insurance Premium) from 2.25% to 1%. That was great news, except that the Annual Mortgage Insurance Premium increased from .55% up to .90% (depending on the Loan To Value ratio).

So, how will this new change effect Homebuyers as of April 18th? Well, the good news is that the Upfront Mortgage Insurance Premium will not incease. It will remain at 1% of the Loan Balance.

The change is specific to the Annual Mortgage Insurance Premium which is increasing 25 BPS (or .25%). Below is a snap shot from the Mortgagee Letter 2011-10:

For a homebuyer, this means that your payment is going to increase on a monthly basis. If your principal balance is $180,000 with a 96.5% Loan-to-Value, your MIP payment would increase from $135.00 a month to $172.50 ($37.50 extra per month).

If you have would prefer not to have your payment increased, you only have two options. The first option is to have an offer accepted and your mortgage loan originator to create a FHA Case Number prior to April 18th. This is only suggested IF you already know the house of your dreams. Do not feel rushed to make a decision.

The second option is to look for a home that is slightly less costly. For example, instead of a home for $180,000, you could choose a home for $172,800.

This scenario may not fit your specific loan. Feel free to contact me to discuss your financial situation further.