FHA Financing Updates

So you are probably thinking to yourself that we are out of the woods and with foreclosures down drastically from their peak how could we possible see any further restrictive changes in the mortgage industry?  Right?  Well unfortunately for many home buyers that have been on the fence, that line of thinking may prove to be a costly mistake.   The most recent changes are coming from HUD and will start impacting all borrowers obtaining a mortgage insured by the Federal Housing Administration (FHA) on or after April 1st.

An FHA mortgage is about to get a lot more expensive.

The first change going into effect will have borrowers obtaining an FHA mortgage after April 1st paying more for their annual mortgage insurance premiums (MIP). The FHA will increase its MIP by 10 basis points, or 0.1 percentage points, for all new loans. This will raise the annual FHA MIP to 1.35% for most borrowers and while this increase is not too significant it does equate to an increase of roughly $16.00 a month on a loan amount of $200,000.00.

Unfortunately that’s not the worst of it. Returning to its pre-2001 policy, the FHA will no longer cancel the annual MIP once an insured mortgage reaches 78% loan-to-value (LTV). Instead, the annual MIP will be assessed until the end of the mortgage term or for the first 11 years of the mortgage term, whichever occurs first for all borrowers putting down 10% or more.  For borrowers making a down payment of less than 10% FHA will assess the annual MIP until the end of the mortgage term or for the first 30 years of the term, whichever occurs first.

It’s not all bad news though.  There are alternative options to an FHA loan that can allow you to get into a mortgage with less money down!  Check back in May for information on Fannie Mae’s Flex low down payment option and tips on what you need to be doing now to qualify for this mortgage!

You contact Brandon with any additional questions or to discuss how he can assist you with your mortgage needs.

 About the Author:

B EmailBrandon Byrd
AVP & Mortgage Banker
NMLSR License # 209657
LoanSouth NMLS# 690971
Phone: 404.915.8252
Secured Fax: 770.685.7011

Equal Housing LogoEqual Housing Lender.  BankSouth Mortgage, LLC dba LoanSouth, a wholly owned subsidiary of BankSouth.  NMLS #690971.  990 Hammond Drive, Suite 210, Atlanta, Georgia 30328.  Subject to credit approval.  All information is believed to be accurate but not warranted.  For information only, it is not guaranteed to be comprehensive.  The information provided has been based on rules and regulations issued by  the U.S. Department of Housing and Urban Development.  Terms subject to change without notice.  Please reference Mortgagee Letter 2013-04 at www.hud.gov and contact a mortgage banker for further information.

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posted: Mar 27, 2013 | No Responses

Posted by:  Brandon Byrd

Brandon is one of our expert presenters at our Home Buyer Seminar. If you have questions about mortgages or getting pre-approved, contact Brandon!

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