You know how when the US Postal Service announces a pending increase on the price of a stamp, it makes sense to buy your stamps prior to the increase? Well, FHA just announced it is going to be increasing its annual mortgage insurance premium (MIP) effective April 1st, 2013 but it is going to cost customers a LOT more than a penny! In fact, on a $300,000 loan, the customer is going to pay extra $25 every month. Believe it or not, that’s not even the worst part!
Right now (prior to these changes coming April 1st), if you take out a FHA loan the MIP will drop off after you reach certain equity and time guidelines. There are a few exceptions, but after April 1st, the majority of FHA loans are going to include mortgage insurance for THE LIFE OF THE LOAN!!!! So using that same example above of the $300,000 mortgage, if that customer kept their loan for the whole 30 years, they are going to pay FHA an extra $9,000 in mortgage insurance premiums.
Don’t get me wrong, FHA loans aren’t always a bad thing. Like all loans they have pros and cons. Don’t just fall for the lowest rate advertised (which is usually FHA). Talk to a qualified loan officer (you can call me anytime at 303-834-3875) about what makes the most sense for you and your situation.
(Tom Stafford is a licensed loan officer in the states of California, Colorado, and Texas. NMLS 262409)