Just as the market is warming up and buzzing with lots of activity, there is another FHA financing change coming our way that will cost buyers. If you are in the market to purchase a home and you plan to utilize FHA financing, you may want to make a decision on a home purchase very soon. Waiting could cost you...because FHA is revising the period in which they can assess annual mortgage insurance premiums on all FHA loans.
As of now, most borrowers with FHA financing are charged a mortgage insurance premium (which is paid each month as a part of their mortgage payment) until the loan balance is at 78% of original loan value (average borrowers gets to that 78% in about the 12th year of the loan term). Once you have reached 78% loan to value then you can request the mortgage insurance premiums you are being charged to be cancelled. The ability to cancel the charged premium is what is changing. For FHA loans with case numbers assigned on or after June 3, 2013, FHA will collect the annual mortgage insurance premium (which you pay monthly, included in your mortgage payment) for the maximum duration of the loan. So if you have a 30 year loan, you will pay mortgage insurance premiums for 30 years. Click here to read Mortgagee Letter 2013-14 containing details of changes, page 2 refers to mortgage insurance premiums (MIP).
So again, if you are currently seeking to purchase a home using FHA financing, finding your home and getting under contract asap could help you save a lot of money in the long run.
To post a comment on this blog post, you must be an HAR Account subscriber, or a member of HAR. If you are an HAR Account subscriber or a member of HAR, please click here to sign in. If you would like to create an HAR Account account, please click here.
Erase note
You currently have no custom folders