Blog of Bonnie

September 24th, 2010 1:28 PM

On October 7, 2010 the FHA mortgage insurance premiums will change. The FHA charges two insurance premiums; one is added to the loan upfront called the upfront mortgage insurance premium and the other is charged monthly, called the monthly mortgage insurance premium.

The upfront mortgage insurance premium is currently 2.25% of the base loan amount after the down payment. This rate will actually be decreasing to 1% of the base loan amount. The problem lies with the monthly mortgage insurance premium, which is currently .55% of the base loan amount and will be increasing to .9% of the base loan amount.

While the FHA borrower will be charged less upfront, the monthly mortgage insurance change will increase the monthly payments for the borrower. This will not only turn out to be more expensive, but will reduce the amount of house the borrowers will be able to purchase.

EXAMPLE: Purchase Price $200,000









NOW              10/7/2010





















Mortgage Amount:

$197,342         $194,930







Principal and Interest (4.5%):

$999.91            $987.68







Monthly Mortgage Insurance:

$88.46            $144.75







Total:

$1088.37         $1132.43







Difference:

$44.06

BUYERS, YOU WILL PAY AN ADDITIONAL $6000.00 FOR THIS SAME HOUSE IF YOU WAIT UNTIL OCTOBER 7TH TO GET UNDER CONTRACT.



Posted by Ralph & Bonnie Mills on September 24th, 2010 1:28 PMPost a Comment (0)

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