Based on a new article published by Lorraine Woellert, as of April 1st, the Federal Housing Administration (FHA) will increase up-front-premiums. If you have FHA clients on the fence, now is the time to buy before the cost of their loan goes up!

They’re talking about increasing the up front mortgage insurance premium from 1% to 1.750% of the loan amount on top of the increase for the monthly PMI from 1.15% for loans up to $625,499 to 1.25% and for loans above $625,500 from 1.15% to 1.5%. Buying before the changes are implemented can save your clients a lot of money! Also have your FHA clients re-qualified if they wait to buy based on the increased fees which will offset their debt to income ratios slightly.

For Example:

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Current FHA Loan:

$500,000 – Purchase Price
$482,500 – Base FHA Loan Amount (96.5% LTV)
$487,325 – Total FHA Loan Amount w/ UFMIP financed

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30 Year Fixed FHA

3.750%
$2,257 Principal and Interest Payment
$467 PMI

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Future FHA Loan:

$500,000 – Purchase Price
$482,500 – Base FHA Loan Amount (96.5% LTV)
$490,435 – Total FHA Loan Amount w/ UFMIP financed

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30 Year Fixed FHA

3.750%
$2,271 Principal and Interest Payment
$511 PMI

This is more dramatic above $625,500, now is a great time to take advantage of the lower premiums. The changes may be in place sooner then we know.

If you should have any questions please contact Gary Limjap at 310.586.0339.

Original article:

FHA Will increase Cost of Up-Front Premiums
By Lorraine Woellert – Feb 27, 2012