Changes coming April 1st 2013:
1) The upfront MIP charge on FHA loans is currently 1.25%. This will increase to 1.35%. On a $100,000 loan the charge would be $1250, as of April 1st it will increase to $1350. For Jumbo Loans ($625k or higher) it will change to 1.30%.
2) FHA loans currently will stop MIP monthly payments once the balance hits 78% of the value of the home and the customer has been in the loan for 5 years or more. This will stop and the only way to get rid of MIP (mortgage insurance) is to refinance into a conventional loan or pay the loan off in full.
3) The minimum down payment currently is 3.5% down. This will increase to 5% down. One of the main reasons for using an FHA loan was the smaller down payment.
BUYERS– your loan terms will only get worse if you are attempting to buy with an FHA loan after April 1st. This means if you are thinking of buying DON’T DELAY!
SELLERS– you may get an influx of potential buyers in March, be prepared and be aware of your new loan options moving forward.
EXISTING HOMEOWNERS WITH AN FHA MORTGAGE-If you were thinking about refinancing, look into it now before the terms change.
Changes coming June 1st 2013: The 15-year FHA loan does not have a monthly mortgage insurance payment if your loan is under 78% of the value of the home. New rules will have a monthly mortgage insurance amount of .45 basis points. If the loan is $100,000 this will be approximately a $38/month payment.