Maintain Your Buying Power
If you haven't heard, FHA announced on February 14th that it is raising the annual mortgage insurance premiums. These changes become effective on or after April 18th, 2011.
I know that some of you think this will hurt the housing market and our economic recovery, so why the changes? HUD wants to strengthen the FHA's Mutual Mortgage Insurance Fund, known as MMIF. Think about it this way. If FHA doesn't become pro-active now and FHA disappears in the future, then where do you think we would be regarding financing options?
So what does this all mean to those buying new homes with a FHA mortgage?
Here is a quick breakdown of different purchase prices just to give you an idea how much more your mortgage payment will increase because of the new FHA monthly mortgage insurance change.
Purchase Price ------- Increase in new FHA monthly Mortgage Insurance payment
$300,000 ------------ $60.31/month
$250,000 ------------ $50.26/month
$200,000 ------------ $40.21/month
$150,000 ------------ $30.16/month
$100,000 ------------ $20.10/month
In simple math, your mortgage payment will go up $10 per month for every $50,000.
You can also look at this from the flip side. This will lower a new buyers purchasing power. Meaning, instaed of a $250,000 purchase price, they can now afford a $241,000 home or a reduction of $9,000 in purchasing power.
So, buy now BEFORE interst rates and mortgage insurance premiums INCREASE!
I know that some of you think this will hurt the housing market and our economic recovery, so why the changes? HUD wants to strengthen the FHA's Mutual Mortgage Insurance Fund, known as MMIF. Think about it this way. If FHA doesn't become pro-active now and FHA disappears in the future, then where do you think we would be regarding financing options?
So what does this all mean to those buying new homes with a FHA mortgage?
Here is a quick breakdown of different purchase prices just to give you an idea how much more your mortgage payment will increase because of the new FHA monthly mortgage insurance change.
Purchase Price ------- Increase in new FHA monthly Mortgage Insurance payment
$300,000 ------------ $60.31/month
$250,000 ------------ $50.26/month
$200,000 ------------ $40.21/month
$150,000 ------------ $30.16/month
$100,000 ------------ $20.10/month
In simple math, your mortgage payment will go up $10 per month for every $50,000.
You can also look at this from the flip side. This will lower a new buyers purchasing power. Meaning, instaed of a $250,000 purchase price, they can now afford a $241,000 home or a reduction of $9,000 in purchasing power.
So, buy now BEFORE interst rates and mortgage insurance premiums INCREASE!
- Mortgage rates are still extremely low
- There is a good selection of homes in most areas
- Homes are more affordable than in recent years
- Rents are rising!
For more information on buying and selling, visit www.IndianasBestHomes.com
Or call Tom or Katrina with The Canarecci Group!
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