FHA Changes June 2013
Bad News for Home Buyers
Please don’t shoot the messenger, but I feel obligated to let you know that the FHA changes June 2013 are going to leave a lot of people in a bad spot in years to come. As some of you may recall, I mentioned some huge changes to FHA mortgage insurance premiums last month and this was the big whopper! For those of you too pressed for time to sort through that article, I’ll give you the cliff notes.
FHA Changes on June 3, 2013
When you get a new FHA mortgage loan you have to pay something called mortgage insurance premiums. It’s a requirement on most FHA loans to insure the bank against you defaulting on your mortgage; a necessary evil of offering such low down payment options to home buyers at lower credit standards, as FHA does.
As it stands now, you would only have to pay these mortgage insurance premiums on a monthly basis (roughly $225/month on a $200,000 FHA loan with a 3.5% down payment at purchase) until the loan amount reached 78% of the original purchase price of the home, for a minimum of five years. At today’s interest rates, if you didn’t make any additional payments to your mortgage, your loan amount would hit that point about 9 years into your loan.
What does this mean? This means that right now, in this example, after 9 years your mortgage payment would decrease by $225/month! That’s because the FHA mortgage insurance is currently removed automatically!
So, what are the FHA changes June 2013?
Well, as of June 3, 2013 FHA will make most people pay mortgage insurance forever!
Take a look at this chart and you’ll understand what I mean:
So, how can I lock in before the FHA increases June 2013?
In order to ‘lock in’ the current FHA MIP guidelines, you will need to acquire an FHA case number prior to June 3, 2013. This is a number issued by FHA to a specific borrower and a specific address.
How can I acquire an FHA case number before June 3, 2013?
All you have to do is find the home you’d like to purchase and fill out a fast quote request (good for those just needing more info) or complete a full mortgage application (more for those that have made up their mind and want to get a case number ASAP). At that point, you’ll be contacted to collect the information needed to obtain your FHA case number and ensure you don’t get stuck paying FHA Mortgage Insurance Premiums forever!