New FHA Guidelines

As of April 1st, 2012 FHA will be rolling out a few new guidelines to their existing home loan program. At first glance, none of us like change, however, I want to share the details of the changes to show how they truly will impact the bottom-line for home buyers. There are two changes that will be made:

  1. The monthly mortgage insurance FHA borrowers currently pay is 1.15% - the new FHA guidelines will increase this to 1.25%.
  2. Currently the upfront mortgage insurance premium, which is rolled into the borrowers loan at the time of closing, is 1% - the new FHA guidelines will increase this to 1.75%.

How do these two changes impact a home buyer? Well, let’s take a look at an example of a $150,000 loan amount.

  • Upfront Mortgage Insurance Premium: $1500
  • Monthly Mortgage Insurance expense: $143.75
  • Monthly Principle and Interest payment: $745.28
  • Total monthly payment: $889.03

Under the new FHA Guidelines:

  • Upfront Mortgage Insurance Premium: $2625
  • Monthly Mortgage Insurance expense: $156.25
  • Monthly Principle and Interest payment: $750.82
  • Total monthly payment: $907.07

Based on this example, we can see that the new FHA Guidelines impact the overall cost of an FHA loan by less than $20.00 per month – or if we want to get really detailed, less than $1.00 per day. Some changes are scary, but the new FHA Guidelines are not – nor should they prevent anyone from considering a home purchase – especially with home values at historical lows and available interest rates are so attractive. If you or someone you know is considering a home, please contact the Russo Team first. We have the knowledge and experience you need to make a smart move today. www.RussoTeam.com 602-864-1200.

This communication is provided to you for informational purposes only and should not be relied upon by you. The Russo Team and RE/MAX Professionals are not a mortgage lender and so you should contact a company who provides mortgage product(s) directly to learn more about its mortgage products and your eligibility for such products.

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