In a recent blog post, I told you about changes to FHA-backed mortgage guidelines that were being considered by congress. Last week, I was on the phone with a representative from the FHA to find out what these changes were and when they would take effect. I found out that changes would be taking place on April 1.
How will the new FHA guidelines going into effect April 1st impact your mortgage?
From the FHA Guidelines:
For loans with FHA case numbers assigned on or after 6/3/13, FHA will collect Annual MIP (mortgage insurance premiums) for the maximum duration permitted as described in ML 13-04
-All Loan Terms greater than 15 years and less than or equal to 15 years with a LTV (loan to value) greater that 90%, annual MIP will be collected until the end of the loan term, or 30 years, whichever occurs first.
-It the LTV (loan to value) is less than or equal to 90% annual MIP will be collected until the end of the loan term, or 11 years, whichever occurs first.
To break this down into easier to understand terms, if the loan you take out exceeds 90% of what the home is worth, you will be required to carry mortgage insurance and pay monthly premiums until the loan is paid off. This applies to ALL loan terms. If the the loan you take out is 90% or less than what the home is worth, you will be required to carry mortgage insurance and pay monthly premiums for 11 years or until the loan is paid off, whichever comes first. These new guidelines will impact loans insured by the FHA on or after June 3 of this year.
Currently, homes loans backed by the FHA are only required to carry mortgage insurance until the loan to value ratio is 78%.
What this really means is that now is the time to buy a home if you are interested in saving the most amount of money. You can still close on a loan in time to fall under the current FHA guidelines and save yourself a ton of money on insurance premiums.
To view a copy of the letter that includes these details and other changes made to the FHA guidelines starting April 1, click on the image below.
If you are interested in purchasing a home and think that a FHA-backed mortgage might be right for you, please contact me as soon as possible so we can discuss your needs. Click here to visit my contact page.