The upcoming few months will be painful for home owners
Just announced by the Federal Housing Administration is that borrowers will need to keep paying the Annual Mortgage Insurance premiums for longer than it currently requires now. In some cases it could be the entire duration of the home loan costing future homeowners many thousands of dollars more than what people pay now. This change only applies to new mortgages with loans beginning by June 3rd. Anything prior to that will be under the current rules and be many thousands of dollars less expensive. Unless you have a lot of surplus cash to needlessly throw away, you need to take action now!
Because of the time necessary to get a loan completed, mortgage guru’s are advising that you apply before the 24th of May. The sooner the better says New Mexico Mortgage Lender Justin Bonds. He thinks that the closer to the deadline the busier co-workers in his office will be trying to get these loans completed before the rule changes takes over. To avoid running out of time and sacked with many thousands in extra fees he asks you act as soon as possible.
Under the current rules the FHA lets you end your PMI any time after 5 years when you own at least 80% of the home. For someone with a loan to value (LTV) ratio over 90%, the FHA will collect this fee for the duration of the loan. If you only borrow 78-90% of LTV you will continue to pay the rate for at least 11 years, and you must get to 78% LTV. This is quite an expensive difference from the current policy.
In the last week the FHA announced that they would be changing the rate of the annual mortgage insurance. This rate hike takes hold on April 1st. Borrowers securing loans after this date can expect a .1% increase. This comes out to $100 for every $100,000 of the home loan, each year. Borrowers with a $400,000 loan can expect to pay $400 more a year than a borrower that had gotten the same loan today. The rate change is slightly lower for borrowers getting loans over $625,000. The annual mortgage insurance for these borrowers will only increase by 0.05%. $50 for each $100,000 borrowed. There are other things to think about that might change the new rate you will pay, however these are the main two that will effect most of the of borrowers.
Obviously this is something you will want to avoid happening to you. Many mortgage experts advise you to take action prior to the 25th of March to prevent any issue that many delay your mortgage from being approved in time. If the home loan is not absolutely completed by April 1st it will be subject to the new rules with the increased fees.
The new changes in the rules took effect because of the consequence the bursting housing bubble has had on the federal program that backed all of the mortgage that were being foreclosed on. The fed is trying to refill its money so that it can continue to back loans for future home owners. This new policy will end up costing new borrowers more, but should secure the federal backing of home loans for several years to come. If not for this program it is very likely that far fewer people would qualify for a mortgage. If you are wanting a loan, act now and save manythousands of dollars over the course of your loan.