FHA Loans New Changes for 2013

With mortgage lending as strict as it has already become in the past few years FHA releases its new changes for FHA loans starting April 1st 2013.

When you use an FHA loan to buy a house, you are required to pay for mortgage insurance. There are two types of mortgage insurance premiums (MIPs) associated with these loans — the annual MIP, and the upfront MIP. A new rule for 2013 will bring higher premiums for borrowers using this government program.

The FHA has announced it will raise the annual premium on new mortgages by 10 basis points, or by 0.10 percent. For jumbo loans, which are defined as $625,500 or more, the premium will go up by 5 basis points or 0.05 percent. Certain loans, such as the FHA streamline refinance, will be exempt from these changes.

Additionally, borrowers who use FHA loans will now be required to pay the annual MIP for the life of the loan. In the past, the annual premium could be cancelled when the loan’s outstanding principal reached 78% of the original principal amount that was borrowed.

This gives buyers who are currently looking to buy a little more motivation to find the house of thier dreams and to get into contract before that April 1st deadline.  When you do the math using the new guidelines it will be very costly and may even deter buyers from purchasing. This will be also raising borrowers monthly payments making it even more difficult for buyers to qualify.

Provided by  Michael Vassallo (Licensed Mortgage Banker)

For more information 631-806-5569

mvassallo@financialequities.com

www.MVmortgages.com