First an FHA loan means that the loan is back or insured by the Federal Housing Administration. It does not mean that the lender is the government. The lenders get approved to sell these federal insured loans, and they have to meet certain guidelines. Well with the number of foreclosures skyrocketing in the past few years, the governement has to pay as they backed these loans to make the lender whole. There is an inherent risk in loaning anyone money so they have your home as collateral, but when the foreclosures rose, the prices fell and they were left holding homes that were worth less than the mortgage. There is a built-in countermeasure for such an event and it is called MIP or Mortgage Insurance Premium. Well even this has not seemed to be enough to balance the onslaught of foreclosed homes. So the future borrowers will now have to pay for the burden of borrowers caught up in the economic downturn. On April 1, 2013 the amount of up front MIP and the monthly MIP rate will increase as well as a guideline change making MIP a permanent fixture (after June 3, 2013) in the FHA loan. The Mortgage Letter was released on January 31, 2013 with all the details of the revisions, we suggest you read it or counsel with your lender ASAP.
So what are my options as a home buyer? Well you can pay cash, buy a home with a conventional loan requiring more down payment, or you can act quick and get you FHA case number pulled before the April 1st deadline.
How much are we talking about here? Well we estimated on a 30 year mortgage that the MIP would increase about $21 on a $250,000 30 year FHA loan. That does not sound like much but it is reducing your buying power and over the life of the loan costs the borrower about $7600.
Contact a member of The Grumbles Team today to find a home, get it under contract and order the appraisal by April 1st to avoid paying for someone elses failed mortgage.
The Grumbles Team is our family serving your family with your real estate needs in Franklin, Tennessee 615-587-5843.
EXIT Realty of the South | 1227 Lakeview Dr. Suite 1 | Franklin | TN | 37067 | 615.550.5555
Williamson County Real Estate Agent
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