April 1 will not just be April Fool’s day but it will also mark the
beginning of more expensive housing for new home buyers. New home buyers will NOW only have few more
days to take advantage of the cheaper housing programs set up by the government
designed to assist people in fulfilling their AMERICAN DREAM of purchasing their
OWN home.
Effective April 1, 2013, FHA or
Federal Housing Administration will raise its annual Mortgage Insurance Premium
by 10 basis points or 0.1% - on most of the mortgage it insures. For example, a borrower has a $200,000 FHA
mortgage, pays about $2,500 per year or $208 a month for mortgage insurance,
after the increase, the borrower would have to pay $2,700 a year or $225 per
month in mortgage insurance.
FHA will also increase the premiums on
jumbo mortgages ($625,000 or more) by 5 basis points or .05% up to the
maximum allowed annual mortgage insurance premium.
The premium increase does not include
some streamline refinance transactions.
FHA will also once again require borrowers to continue paying the annual
Mortgage Insurance Premiums for the remaining balance of their loan. In 2001, FHA has cancelled the required MIP
once the principal has reached 78% payment of the original principal
balance. However, FHA remains
responsible for insuring 100% of the outstanding loan balance until the loan is
fully paid.
FHA is also set to propose an increase
in down payment for loans above $625,000.
The agency will require a minimum down payment from the old 3.5 to 5
percent.
MORTGAGE INTEREST RATES
Mortgage interest rates have hit
historical lows during the country’s economic crisis and have remained so until
the first few months of the year 2013, but experts believe that this may change
SOON! National Association of Realtors economist Lawrence Yun predicts the
rates will reach 4% during the summer and 4.5% by 2014’s first half as the US
economy continues to improve.
HURRY! If you are thinking about
buying a home with FHA financing then YOU need to MOVE quickly or YOU will PAY
higher down payment and an increase in monthly payment over the terms of the
loan.
MORTGAGE OPTIONS
Some mortgage companies offer
flexibility in mortgage rates. You can
lock a rate without submitting a property address. This will give you more time to search for
the perfect home while locking in that best rate possible. The lock in rate is valid for 60 days. Take note that experts predicted that
interest rates are about increase. So
it’s best to lock down the current low interest rates! (You can contact me for details)
3% DOWN PAYMENT CONVENTIONAL LOAN PROGRAM
Another mortgage company is offering conventional 3% down payment program. Mortgage insurance is less than FHA, however
if the borrower wants to enjoy lower pricing then he/she must have at least
a 680 credit score. Here are the
highlights of 3% Down Payment Conventional Loan Program:
·
Minimum credit score of 680 or
better (Mortgage Insurance Requirement)
·
DU “Approve/Eligible”
·
Conforming Fixed Rate loan only
·
One Unit Primary Residence,
includes PUD and Condo
·
3% contribution from borrowers
own funds required
·
Max seller contribution = 3%
·
Gift allowed for closing costs,
prepaids, only after borrower has made 3% contribution
·
Full appraisal required – no
drive by, no AVM
·
Multi-family homes are not
eligible for the 3% down payment conventional loan program.
HUD 184 UPDATE
On March 8, 2013, the Housing and Urban
Development (HUD) released a memorandum about the suspension of Section 184
Indian Housing Loan Guarantee Program effective March 28, 2013 due to lack of
availability of fund resources. Section
184 program is a home loan product offered by HUD specifically catered to native
Americans and Alaska Natives. The
program allows consumers to take on a loan with low down payment of at least
1.25% for loans under $50,000) at competitive interest rates, while cancelling
the monthly mortgage insurance (no MIP).
Due to the suspension of HUD 184, former eligible borrowers and lenders
will now need to look for other financing option which is going to be more expensive.
From
a selling perspective, these changes can greatly impact the buyers that can
afford to purchase the home and it can impact the selling price.
NOW
is the best time to close that deal! Starting April 1, 2013, purchasing a new
home will be more expensive! Have a chat with me if you’re planning to buy or
sell your home, and I assure you I will save your hard earned money and your
valuable time.
