FHA change hikes monthly mortgage payments
It was just last October 8th when the FHA increased the monthly mortgage insurance premium from 0.55% to 0.9% and now on April 18th, 2011, the FHA is hiking the premium again. This time the mortgage insurance premium will increase to 1.15% for 30 year loans with a Loan to Value (LTV) ratio of greater than 95%.
Let’s say you’re buying a $150,000 house which gets you a nice house in Spring Texas and your down payment was 3.5% (the minimum down payment on a FHA loan) and your loan was for 30 years, your monthly mortgage insurance premium will increase $30.16. That’s a 28% increase.
Put another way …. The $30 increase in the FHA monthly mortgage insurance premium just decreased your buying power by $6,000.
How do you avoid the increase in the FHA monthly mortgage insurance premium? You need to be in contract on a Spring Texas home before April 18th. You don’t have to close by April 18th. You only need to be in contract.