In a Nut Shell! FHA COSTS WILL GET HIGHER!

 

Cost for FHA could get a lot higher in the future, but are do to increase as of Sept. 7th. So those people who lock their loan before Sept 7th, will save a whole bunch of money $$$$$$.

Let me explain: The FHA authorities are having the pressure of having too much business. The underwriting standards are looser than conventional loans, so people are opting for FHA products.

In order to generate more profit to FHA, and maybe a bit less business for their overloaded system, the FHA people are increasing MI, or commonly known as Mortgage Insurance. MI is going up 1% and monthly costs will be up from .85% - .90%.

200,000 @ 5% for a 30 yr Fixed Rate Mortgage

  TODAY AFTER 9/7
Mortgage 204500 202,000
P/I  $1098   $1083
MMI       94       152
PAYMENT  $1192    $1253
DIFFERENCE         $43

Now, the Feds have given permission to increase the MI rate to a higher level. At the highest level, which has not been asked yet (unlike the for sure rate increase as of 9/7), the increase could become $152 a month.

So, please be forwarned! Sitting on the fence, may not be a wise decision. If you have found the home, lock in your rate before Sept. 7th, and save yourself the increase in MMI.

The costs of purchasing have and will go up. Even though the loan amount has decreased your monthly mortgage insurance will go up!