FHA Changes – The Only Consistent is Change

Dustin | Home Buying Process, Mortgage Approval Process, Mortgage News, Mortgage Payments, Mortgage Programs, Mortgage Rates, Refinance Process, home buying, mortgage, real estate | no comments

As French Author François de la Rochefoucauld so perfectly stated, “The only thing constant in life is change.”  Well, those words certainly ring true for the mortgage industry, which has seen a significant shift in guidelines, interest rates, and regulatory oversight.  So, what is next?

FHA has been given the authority to change the amount charged to borrowers for the up front and annual mortgage insurance premiums… and they wasted little time making some adjustments.

This is going to impact how Realtors write up FHA purchase agreements, as well as the monthly payments borrowers might expect when buying or refinancing their home.

The new premium amounts will be effective on all FHA case numbers assigned on or after October 4, 2010 – so borrowers that already have an FHA transaction in process won’t be impacted, but new FHA clients who come into process on, or after, October 4th will be subject to the new guidelines.

Here’s what you need to know:

• The Up Front Mortgage Insurance premium is now 1.0% for all standard FHA programs, including on purchase money mortgages. This is a significant change from the 2.25% Up Front Mortgage Insurance typically in place on FHA 30 year Fixed Rate transactions.

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Interest Rates Drop to 50+ Year Low

Dustin | Mortgage Payments, Mortgage Programs, Mortgage Rates, Refinance Process, interest rates | no comments

I track the mortgage rate market closely.  I read about the economic conditions that affect interest rates and receive mortgage bond alerts throughout the day so I can stay ahead of a somewhat turbulent interest rate environment.  Even with all the resources I have access to, I am still shocked to wake up this morning and see just how far rates have fallen.  It has been such a sudden and underreported dip, I am not sure if most homeowners are aware just how low interest rates have dropped.  Which is what prompted me to write about why it may be the perfect time to refinance.

Rates Hit a 50 Year Low

In June of 2009, my office had record volume largely due to the unbelievably low interest rates.  We helped countless homeowners reduce their overall mortgage payments.  As low as rates were at that time, can you believe they are almost .750% or better today?  It is the lowest interest rate average since Freddie Mac began tracking interest rates in the 1970’s and believed to be the lowest rates since the 1950’s.

For well qualified borrowers I am locking conventional 30 year fixed rates at 4.250% (APR 4.399%).

Breaking Down the Numbers

To give you an idea of how much money these rates could save you, I thought I would break down the numbers to better illustrate the savings.  Take a look at a couple of hypothetical scenarios (assumes 750 credit score, 35% DTI, loan amount $275,000, and 25% equity in your home):

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