Buy Now- Mortgage Insurance Premiums to Rise April 1, 2012.
As a buyer if you have been waiting to jump into the real estate market you may want to do so now as FHA plans on raising mortgage insurance premiums (MIP) on new borrowers starting April 1, 2012. FHA plans on raising upfront mortgage insurance premiums by 0.75% and annual mortgage insurance premiums by 0.10%.
What Does This Mean to You as a Buyer?
It means you have less buying power after April 1st then you do now. Let's say you are buying a home for $200,000. Once mortgage insurance premiums are raised it will cost you $1,500 more for your upfront mortgage insurance and then $200 more every year for your ongoing mortgage insurance premiums. With the added monthly expense you will qualify for a lower loan amount.
Here is the new FHA Annual Mortgage Insurance Premium Schedule Starting April 1, 2012
|
Loan Term |
Loan-To-Value Ratio |
Mortgage Insurance Premiums Per Year |
|
|
15-year |
>90% |
0.60% |
|
|
15-year |
<=90% |
0.35% |
|
|
30-year |
>95% |
1.25% |
|
|
30-year |
<=95% |
1.20% |
|
To figure out what your monthly mortgage insurance will be on your new loan multiply your beginning loan amount by the insurance premium above then divide that by 12.
Why is FHA raising Mortgage Insurance Premiums?
FHA plans to raise Mortgage
Insurance Premiums because they are insuring a much larger percentage of mortgages than ever before, putting them at a greater risk.
Takeaways:
-FHA will raise mortgage insurance premiums on all loans not insured prior to April 1, 2012. You have until then to get under contract on a home and get your loan secured.
-After April 1, 2012 you will have to buy a less expensive home to have the same payment as if you bought now.
-BUY NOW before the April 1, 2012 deadline!!!
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