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Matt Baker

FHA Premium increase

Tuesday, August 10, 2010 - Article by: Matt Baker - Cobalt Mortgage, Inc. BK-0909801 - Message


The Senate approved last night the bill HR 5981. This bill permits HUD (Housing and Urban Development) to increase the annual FHA premium to a maximum of 1.55% for loans with a minimum down payment of 3.5%. Mortgage insurance is government insurance protection for the lender against potential losses. So if people start defaulting on the government loans, these collected premiums will cover any future losses through homeowner defaults.

What does this mean?

First of all it will take a month or so for HUD to send out notice of a change. This notice which is mandated by the Senate will draw out in exact detail when the new premiums take into effect and how much they are. This Senate bill doesn't automatically jump the premium by a full point. HUD actually sets the limit, the Senate just authorized for a max amount. All indications from HUD they are going to increase the amount to .9%. So on a $200,000 loan, your payment can increase by over $70 more dollars.

So although this doesn't take into effect today, Real Estate and Mortgage professionals need to encourage their clients to take advantage of the lower Mortgage Insurance premiums, as an additional increase in payment could dramatically impact the qualifications of a potential borrower. Contact me today and I can help get you qualified for a mortgage loan and take advantage of a "perfect storm" in real estate financing.

Super LOW Rates, Great Government program with low MI premiums and Affordable housing a perfect time to BUY

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