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April 1st is No Joke - FHA to Increase Upfront and Annual Insurance Premiums

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.

·         Consider Mass Housing as an alternative. The new Mass Housing program that offers 97% financing with NO PMI is an incredibly powerful tool. This program can save buyers tens of thousands of dollars over the course of a 30 year mortgage.
Thea explains that, "The FHA program was designed to be a very affordable alternative for those with a low down payment and credit that was considered less than perfect. The FHA mortgage is still a very good option, but new alternatives are becoming available every day for consumers. You should be sure to consider all of your options and ensure that you are maximizing your buying power."
If you are interested in learning more about these programs, please contact:
Thea Simolari
Senior Loan Officer
Mortgage Network, Inc.
NMLS # 20914
Cell: 617-699-7692

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