My good friend, Roger Paschal, sent me the following update today. As Roger notes, if you've got buyers who are shopping, make sure they are aware of these rapidly approaching dates.
FHA Commissioner David Stevens has announced the changes in Mortgage Insurance Premiums will go into effect on September 7, 2010. The reduction of the up-front premium appears to lessen the effects from the increase in the annual premiums but it doesn't mean that they're offsetting.
While the up-front has been lowered to 1.00% from 2.25%, the annual premium was increased to .90% from 0.55%. Even though the up-front was decreased, the annual premium increase will result in higher monthly payments.
|
Sales Price $175,000 |
Before 9/7/2010 |
After 9/7/2010 |
|
Up-Front MIP |
2.25% |
1.00% |
|
Annual MIP |
.55% |
.90% |
|
Payment - P+I + MIP |
$954.06 |
$992.15 |
|
Higher Payment |
|
$38.09 |
|
Lower Mortgage |
|
$2111 |
The takeaway here is that once the premium has changed, there is not much a borrower can do if they want or need a FHA loan. If FHA has issued a case number prior to the effective date of the change, the buyer can get in under the old rules.
The deadline may create a sense of urgency and you can help your buyer save some money while putting a transaction on the books prior to Labor Day. Call any buyers this would affect and try to get them moving.
