FHA is the single hottest loan in Northern California. With a limited amount required down (3.5%) and more relaxed income and asset requirements FHA is the way most new Homebuyers are going. As of October 4th the cost of having an FHA loan will INCREASE MONTHLY for the first 5 years.
Let’s look at the math for a 30 year fixed FHA loan at 4.875%
Current rules FHA Cost:
Purchase Price: $400,000
3.5% down: $14,000
2.25% upfront fee: $9000
Total Loan Amount: $394,685
Principal and interest: $2088.71
Taxes (estimated): $322
Insurance (estimated): $80
Mortgage Insurance: $175.70
Total Monthly payment: $2667.33
NEW AS OF OCTOBER 4TH FHA Cost:
Purchase Price: $400,000
3.5% down: $14,000
1% upfront fee: $4000
Total Loan amount: $389,860
Principal and interest: $2063.17
Taxes (estimated): $322
Insurance (estimated): $80
Mortgage Insurance: $287.52
Total Monthly payment: $2753.61
Although the monthly payment is higher for the first 5 years (You have to pay mortgage insurance for 5 years) with the new rules if you keep the loan for the full 30 years you will actually save about $2485. Where this will become an issue is with “cusp” borrowers. Borrowers who were max qualified at a certain amount will now qualify for less.
Written by Jennifer Ready www.Readybell.com
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has written 199 articles on Ready Bell Home Loans @ Mason McDuffie Mortgage
