On April 1st there will be an increase to upfront FHA Mortgage insurance and FHA monthly mortgage insuranance. On a $250,000 purchase price the increase to upfront insurance premiums would increase by $1,810. In addition, the monthly insurance premium would increase by $17.
An FHA loan on that $250,000 purchase scenario would also effectively increase the down-payment by $151(to produce the same result). That may be somewhat of an insignificant number as far as your bank account balance is concerned, but can still make a difference when it comes to the minimum assets required for the loan.
With these increases, where does the figure of a 2% increase to effective purchase price come into play? Well, if you have an accepted contract with an FHA case number assigned to the purchase of the home by March 31st, the new rules are not in place yet and you will pay the current Mortgage Insurance Premiums. But if you make an offer and have it accepted then place an FHA case number pulled after March 31st, the same mortgage will cost you more money.
If you were to purchase a $250,000 home with an FHA case assigned before March 31st, it will have the same monthly payment as if you were to buy a house at approximately $255,000 after March 31st. There have been several increases over the past few years which have increased the mortgage insurance premiums considerably. However, with interest rates at an amazingly low point in history and prices of homes at a considerably low level, many consumers have been unaware of these increases.
MyFirstPlaceNW is here to make sure prospective homebuyers have information that is not always shared with all consumers. If you are thinking of becoming a First Time Home Buyer in the Greater Seattle area and want to learn more about the process, please go to our Calendar/Reservations page and sign up for one of our FREE home buyer workshops.
If you would like more information on the increase to FHA Mortgage Insurance, please vist the HUD website.
