BluefoxToday blog : What The New FHA Changes Mean In Dollars & Cents

What The New FHA Changes Mean In Dollars & Cents

On Tuesday and Wednesday of this week I wrote blogs on the up coming FHA changes "FHA Streamline Refinance Change" and "FHA Streamling Refinance Charts".  I really should have titled the second blog "FHA Streamline & Purchase Charts" because the charts apply to both.

In those two blogs I did not provide an example of what these changes mean in dollars in cents, so I thought it would be a good idea to do so.  By doing so I think it will make the new UpFront Premium and Annual Mortgage Insurance (MI) multipliers more meaningful to most people.  Also by seeing the changes in dollars in sense I believe it will minimize the initial impression that the April 9th change to Purchases, Refinances, and Streamline Refinances might have created.  But heighten the reason for why someone thinking of doing a FHA Streamline Refinance should wait until June 11th to do so.

On April 9th FHA will raise their UpFront Premium from 1.00% to 1.75%, and the MI multiplier from 1.15 to 1.25. on a mortgage that the Borrower is only putting down the minimum downpayment of 3.5%.  While this seems like a big jump at first glance, it is not as much of an increase to the monthly mortgage payment as it might seem.  For example the increase to the monthly payment on a house that sells for $100,000, would be $11.42.  That increase in the monthly payment would proportionally go up or down according to the selling price, so a house selling for $200,000 the increase to the monthly mortgage would be $22,85.  While any increase is not welcomed, once you see what the impact on the monthly mortgage payment will be in dollars and cents, it is not as bad as might seem initially by just looking at the increased multipliers.

However, the UpFront Premium and MI change to the FHA Streamline Refinances for FHA Loans with Case Numbers prior to May 31, 2009, are as dramatic as the initial impression the new multipliers initially give in my opinion.  For example If a Homeowner who has an FHA Mortgage that has an FHA Case Number before May 31, 2009, waits until June 11th to do a Streamline Refinance, in stead of doing it now, the savings will be $64.08 on a $100,000 loan.  Again this savings would be proportional to the loan amount so a $200,000 loan would have a savings of $128.16 by just waiting about 2-3 months.  This saving would be on top of whatever savings that they would also see through the reduction in their interest rate.

I hope that these examples make it a little more clear as to what the impact of these new FHA changes will mean in dollars and cents.

 

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 Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net

Comment balloon 6 commentsGeorge Souto • March 10 2012 04:33PM

Comments

Thank you for keeping us updated on all of these changes George - you make everything so clear!

Posted by Debbie Walsh, Hudson Valley NY Real Estate 845.283-3036 (Shahar Management) over 6 years ago

Your dollars and cents example of the FHA changes makes it much easier to understand.  When folks are given the hard numbers, it makes it less scary so to speak.  Great job!

Posted by Brenda Mullen, Your San Antonio TX Real Estate Agent!! (RE/MAX Access) over 6 years ago

George,

It comes down to "if the increase hurts, you shoudn't be considering the house in the first place!" Still an increase is an increase and for what?

Slowly but surely the American Dream is being undermined. What's $20.00 a month here or an extra $200.00 each month for gas.

Bill

 

Posted by William J. Archambault, Jr. (The Real Estate Investment Institute ) over 6 years ago

Very interesting George. I ran into a mortgage broker this week who was complaining how this was going to be a killer. I don't see it that way at all based on your calculations.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 6 years ago

Great job explaining the two different changes that are coming around the corner. It is unfortunate that the decision was made to increase the monthly MI and MIP. Some will have more difficulty qualifing.

Thank you for sharing the post with all of us.

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) over 6 years ago

George,

FHA has to do what it has to do to reflect the current marketplace. The increases seem to affect the housing market marginally.

Posted by Esko Kiuru over 6 years ago

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