Tuesday, October 5, 2010

Back in the Saddle again....Mortgage Insurance explained as an interest rate.

Here I am, blogging once again. But I do have loan news to share today. As of yesterday, 10/4/10, the new FHA upfront and monthly mortgage insurance premiums have been changed for any case numbers pulled on or after 10/4/10. Just looking at the numbers doesn't mean much, but seeing them as a percentage rate makes them more understandable. For a client who would like to purchase a home today they will end up paying approximately .375% higher for their loan than those whose case numbers were issued prior to Monday. Now of course it won't be in your interest rate, but that is what the new premiums do to the payments. I understand that FHA has taken losses over the past few years and that our industry is still reeling, but when interest rates start moving up, buyers will have less and less ability to purchase. Also, this new increase hinders current FHA borrowers to take advantage of these amazingly low rates, because the savings is negated in the almost double mortgage insurance. I hope this move does what the government thinks it will do.

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