FHA Mortgage Premiums Set to Increase

The Premier Group Keller Williams RealtyOn April 1st, 2013, the Federal Housing Administration is increasing its required monthly mortgage insurance premium by 0.10 percentage point (from 1.25% to 1.35%). FHA limits are set according to the state in which you live. Loans greater than $625,000 with a term longer than 15 years, the increase will be 0.05 percentage point, or $50 per year for each $100,000 in loan amount.  While these numbers don’t seem like much, the amount of additional money you will be paying can add up to a substantial amount over time.

According to hud.gov, this change will be effective for FHA case numbers assigned on or after April 1, 2013. To avoid the increase, borrowers will need to determine from their lender when would be their deadline to apply. The cost of the premium varies according to the size of the loan, term and loan-to-value ratio.  For a chart showing premiums increases for various loan types, check out The Basis Point .

In addition, starting June 3rd 2013, FHA will no longer allow you to cancel your mortgage insurance premium payments when your loan balance drops to 78% of your property’s value. That means you could possibly pay a mortgage insurance premium for decades, which may even be for the life of the loan.

If you are considering applying for an FHA loan, your window of opportunity to avoid the upcoming changes is narrowing. Act now by contacting your lender to get a new home loan.

At The Premier Group/Keller Williams  in Woodstock, GA, our experience ranges from consistently managing and closing short sale and distressed properties to marketing and selling luxury homes. When you decide to sell your home or purchase a home, don’t hesitate to contact The Premier Group. We are dedicated to being the most qualified specialists that you can turn to for all of your real estate needs.