Virginia First-Time Buyers Face Increased Costs With FHA In April |
In Other Words...Time Is Money
You've heard the saying 'Time is Money', well when it comes to buying a home today, the saying still holds true.
Effective April 5, 2010, buyers who are using an FHA loan to purchase a home will face an increase in the upfront mortgage insurance premium, from the current 1.75% of the loan amount to 2.25%. What does this mean in terms of dollars for the average homebuyer?
- For the average first-time homebuyer looking at a purchase price of $250,000, after April 4, 2010 instead of being charged $4221.88, the cost of the FHA mortgage insurance premium will increase to $5428.13.
- For the average move-up homebuyer looking at a purchase price of $500,000, after April 4, 2010 instead of being charged $8443.75, the cost of the FHA mortgage insurance premium will increase to $10,856.25.
Buyers obtaining FHA financing will see this increased cost either up front by having to pay the total cost at closing, or finance this into the loan which means an increased total monthly payment.
Please click here for the information that was release by HUD. *No Down Payment loans are still available for qualified VHDA buyers. Please email me for more info.* In other words, if you're actively in the market to buy a home now, you can avoid this increased cost by identifying a home and being 'Under Contract' before April 1.
Please note that short sales may not be the best type of properties if you are trying to beat this deadline, as your lender may not start processing your loan until after the seller's lender has approved the short sale of the property. So, if you're under contract with a short sale on March 1, but you don't receive short sale approval from the seller's lender until April 5, you would still be subject to the higher rates for the FHA mortgage insurance premium.
See Also: Video – Biggest Buyer Blunder, The Importance of Mortgage Approval