The Federal Housing Administration announced several changes to FHA insured loans this week.
1) Â The upfront mortgage insurance premium will increase from 1.75% to 2.25%.
For example: On a a $200,000 mortgage, a 1.75% mortgage insurance premium added $3,500 to the FHA loan, bringing the total loan amount to $203,500 that a borrower was required to qualify for. With the increased premium at 2.25%, the premium would increase to $4,500 and the borrow would need to qualify for a $204,500 loan. This amounts to an approximate difference of $5.37 per month at an interest rate of 5.00%.
2) The maximum amount of seller assistance will drop to 3% of the value of the property. This is a reduction from the previous 6% seller assistance provision.
For Example: On a $200,000 mortgage, a seller could contribute up to $12,000 (6 percent) to the buyer’s closing costs and prepaids. With the new 3 percent limitation, this would decrease the maximum seller contribution to $6,000. This change will definitely impact buyers on most transactions.
A Message to Homebuyers: Please be aware that along with the FHA loan changes, the ending of the Homebuyer Tax Credits, and likely increase in mortgage interest rates, that this stellar window of opportunity to buy won’t last forever. We encourage you to contact your Bella Casa agent and seriously consider taking action soon. Data contributed by Ken Whiting, Sales ManagerWestcorp Mortgage Group1018 NE 3rd Street, Suite AMcMinnville, OR 97128503.435.2087 Office503.437.1117 Mobile866.460.0495 Toll Free503.472.0627 Faxwww.westcorpmtg.com