I learned something last week, that I need to share because it does not seem to be making the news. On April 5th, the FHA upfront mortgage insurance premium is going to be raised from 1.75% to 2.25%. When you are not putting 20% down on a home, and don’t want to participate in a second mortgage, you qualify for an FHA loan, which only requires a 3.5% downpayment. The upfront mortgage insurance premium is calculated off of your loan amount. It does not include the down payment. On a $100,000 loan, the upfront premium would change from $1,750 to $2,250. Understand this amount is owed ‘upfront’ at the time of closing and is separate from the monthly mortgage insurance you are still required to pay.
FHA loans are assigned case numbers. So, anything under contract prior to April 5th, will not be affected, as long as the loan is approved.
If you have detailed questions, it is best to speak with a lender. Since, we are all more frugal than a year ago, I thought I would give you a heads up.