FHA is giving homeowners and buyers until October 4, 2010, to lock in a low monthly insurance premium according to Gibran Nickolas, Chairman of the CMPS Institute, an organization that trains and certifies mortgage bankers and brokers. After October 4, the monthly insurance premiums on FHA loans will increase by over 63%.
What does this mean for home buyers?
A home buyer purchasing a $200,000 home using a $193,000 FHA mortgage before October 4 would pay an insurance premium $88.46 per month. If the same home buyer waits until after October 4, the insurance premiums would jump to $148.01.
"In this example, the home buyer would lose $59.55 per month, or $7,146 over a 10-year timebframe," Nicholas said. "Althought the upfront mortgage insurance premium is going down after October 4, the real impact to the home buyer is actually a net increase in their out of pocket costs because the monthly premium is going up by 63%. Remember, sellers can pay the upfront premium or it can be financed into the loan amount, so home buyers rarely pays the upfront premium out of pocket. On the other hand, the increase in the monthly premiums wil be paid right out of the home buyer's pocket with their mortgage payment each month."
Home buyers considering an FHA loan give Larry or Jo Ann Thomas, Billings Real Estate Professionals and Laurel Real Estate Professionals a call at 628-2903 and let's start looking for your new home.
