Beginning October 4, 2010, new FHA Mortgage changes will be coming through, due to bill H.R. 5981 signed into law August 11.
The new FHA Mortgage changes include a reduction in the upfront mortgage insurance premium (also known as Upfront PMI) from 2.25% to 1%. The monthly mortgage insurance premium will rise from .50% to .85% on loans with more than 5% down over 15 years. It will rise from .55% to .90% on loans with less than 5% down (which many FHA loans are, since their minimum downpayment is only 3.5%).
Dan states that the amount borrowed will be lower, but the increased monthly mortgage insurance premium could effect approvals when the borrower is close in their income-to-debt ratio for qualifications.
It also will mean that monthly mortgage payments, in general, will rise for FHA loans.
Buyers wanting to take advantage of the FHA loan standards as they are need to be under contract and make loan application by the end of September, to ensure they have their case number assigned prior to October 4. Contact me today to take advantage of the FHA loan guidelines as they stand now!