Matthew Reid of Mortgage Masters Inc., a leading mortgage banker located at 520 White Plains Road in Tarrytown, NY sent out an email which I think is important for new home buyers to note. It states the recent changes made to the monthly mortgage insurance for FHA loans. He also highlights alternatives to going for a FHA loan that you may want to consider.
According to Matt - Any FHA case number pulled on or after June 3rd 2013 will have a monthly mortgage insurance premium for the life of the loan. Right now it falls off at 78% loan to value. As of June 3rd it will never fall off. On a $300,000 mortgage that would cost the buyer an additional $79,000 over the course of the loan. A buyer does NOT need to close by the 3rd, just have the case number pulled on the client and the property being purchased.
Any FHA case number pulled on or after April 1st will have an increase in the monthly mortgage insurance of 10 basis points.
This is certainly a big change and FHA volume will continue to decline. There are alternatives to FHA. Conventional financing at 95% along with the mortgage insurance at 95% is available and competitive. SONYMA is another good outlet for those buyers that fit guidelines. Mortgage insurance in general has become easier to obtain, more attractive, and there are more companies offering it. Single premium mortgage insurance has been very popular the past 12 to 16 months and will continue to be a big part of the market.
Please don’t think that FHA is gone forever, ironically , the average buyer keeps a mortgage for 7 years, the approximate time it takes to hit 78% loan to value on an FHA loan, when mortgage insurance falls off! I know one could argue that people will keep loans they have now with rates in the 3% range but historically speaking this should not cause as much of a problem as it would seem.
I always enjoy working with new home buyers. Don’t hesitate to email, txt or call me with any questions you may have about the market. Spring is the opportune time with more houses coming on the market. Sign up for listing alerts and see what is on the market.
Author:Thomas Ricapito Phone: 914-804-3048 Dated: March 7th 2013 Views: 4,934 About Thomas: I got into real estate sales by accident in 2006. At the time, I recently earned a Bachelor's Degre...
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