Changes in the FHA Mortgage Market
There have been several changes in the FHA backed mortgage market in the last year and the newest will occur on April 1. We will see upfront Mortgage Insurance increase from the current 1.0% to 1.75% that will help strengthen the capital reserves of FHA. On top of this, the annual renewal premium will be as high as 1.25%. This will significantly increase a borrower’s cost.
This is important because a good many of our home buyers in Louisville utilize an FHA backed loan. As I look over my clients in the past, our first time home-buyers are often using FHA mortgages due to the low down payment required.
One complaint that I hear is that MI (Mortgage Insurance) is required with an FHA loan. I think that it is hard to complain about paying mortgage insurance when you are able to buy a new home with a lot less than 20% down payment. With this being said; the increase in Mortgage Insurance on a yearly basis and upfront will make a difference in the monthly payment of our Louisville real estate clients.
FHA loans will also work with some condominium purchases. The key here is for the condo development to be FHA approved. If I am showing homes to an FHA buyer, I always make sure that the condo is approved first. I don’t want to waste our time showing something that won’t work. Your FHA loan officer will be able to tell you if the condo development is approved or not.
Feel free to contact Tim Hollinden with The Hollinden Team if you have any questions about this or the Louisville KY Real Estate Market.
Good post Steve. I have been seeking the opportunities these changes will create. One item that isnâ€™t well known or at least not publicized is the seller can pay the UFMIP when the buyer uses an FHA first mortgage. That little tidbit could make or break a deal! A couple posts on the same subject:
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