Dear zoomUTAH.com Members,
I am compelled to alert you all that FHA is proposing some major changes concerning the dynamics of their Purchase loans. In their infinite wisdom, and contrary to any semblance of reason, they are shooting the Housing Market in the head (not the foot). Below, you will see the changes coming April 1st. You must have an FHA case number assigned to a home by April 1st to avoid the new guidelines:
1. The up front mortgage insurance premium (UFMIP) is the portion that gets added to the loan amount at closing. The current factor is 1.0%. The new factor will be 1.75%. On a $200,000 loan, the UFMIP would go from $2000 to $3500
2. The annual premium that gets paid monthly in your payment will be increased from 1.15% to 1.50%. On a $200,000 loan, the payment will increase by $58.33/mo.
3. Currently, FHA allows concessions of up to 6% so the Seller or Loan Officer can help pay for closing costs, home inspection, prepaid expenses, etc… It’s in discussion, though not yet definite, that FHA is lowering the maximum concessions to 3%. This will cause some Buyers to have to be out-of-pocket more than just paying their down payment. A home selling for approx. $225,000 breaks even on closing costs that equal 3%. Because of the nature of half of your closing costs being a fixed cost, the percentage rises the lower the purchase price gets below the $225,000 threshold. For instance, a purchase price of $125,000 requires approximately 4% concessions to pay for all the closing costs. The fact that 1% cannot be paid requires the Buyer to come in with $1250, in addition to their down payment.
It’s not all doom and gloom. I just get emotional when our Gov’t gets in the way of progress in a battered Housing Market. I have some solutions for this dilemma and I welcome your calls so we can address your individual needs and come to a solution to your financing plans. For anyone sitting on the fence, you may want to step things up in a big way. Keep in mind that, although you qualify for FHA Financing, you may not qualify for Conventional Financing and identifying a property now may be warranted.
Call me today at 801-949-4872 if you have any questions or would like to get pre-qualified before the new rates hit April 1st.
Joel Ellowitz, CMPS NMLS #290849
6965 S. Union Park Center Ste.470
Midvale, Utah 84047