Recently, the Federal Housing Administration (FHA) announced that it will hike its upfront premium by 75 basis points to 175 basis points for all single-family loans on April 1st. As if you didn't have enough to think about with taxes looming!
While the FHA assures us that the increase is designed to "have minimal impact on the market and borrowers," there are still some considerations for home buyers.
The FHA is increasing what is known as the Upfront Mortgage Insurance Premium "Upfront MIP" from 1.00% to 1.75% of the loan amount. This increase translates to higher payments and directly impacts the ability to qualify for a mortgage.
One of our business partners, Thea Simolari, Senior Loan Officer at Mortgage Network, Inc., broke down the details of what this means for you.
· If you are out shopping for a home and an FHA client (3.5% down payment), it's time to get "off the fence" and get under contract by month's end so that the FHA case number will be pulled before the deadline of March 31st. After that date, you will pay more for your mortgage.