Mortgages with less than 20% down payment usually require mortgage insurance. This insurance, referred to as PMI, will soon become more expensive. The rates for PMI are going up on October 4, 2010. See the article below from The Texas A&M Real Estate Center newsletter dated August 31, 2010.
FHA INSURANCE PREMIUM CHANGING
ANN ARBOR, Mich. (CMPS Institute) – The Federal Housing Administration (FHA) is giving homeowners and buyers until Oct. 4 to lock in a low monthly insurance premium on FHA loans, according to Gibran Nicholas of the CMPS Institute, which trains and certifies mortgage bankers and brokers.
After that, the monthly insurance premiums on FHA loans will increase by over 63 percent.
A homebuyer purchasing a $200,000 home using a $193,000 FHA mortgage before Oct. 4 would pay an insurance premium of $88.46 per month. If the same homebuyer waits until after, the insurance premium would jump to $148.01.
Although the upfront mortgage insurance premium is going down, "the real impact to the homebuyer is actually a net increase in their out-of-pocket costs because the monthly premium is going up by 63 percent," Nicholas said.
"Remember, sellers can pay the upfront premium or it can be financed into the loan amount, so homebuyers rarely pay the upfront premium out of pocket," he said. "On the other hand, the increase in the monthly premiums will be paid right out of the homebuyer’s pocket with their mortgage payment each month."
If you are considering buying a home, now is the time to move forward with your purchase, before the rates increase.
Let us at Coldwell Banker The Ron Brown Company help you with all your real estate needs. From buying to selling, we are here.
Coldwell Banker The Ron Brown Company
Offices in Victoria, Cuero, Rockport, Ingleside and Wharton Texas
www.ronbrown.com
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