Increased Mortgage Payments?

Washington Crossing the Delaware

When I Googled April 18th to confirm some hearsay, I learned that April 18th was the day when the American Revolution began in 1775 and the day it ended in 1783.That’s an interesting fact albeit a little antiquated; I have some more recent April 18th based news for this year.

Word of mouth isn’t always reliable, no matter what business you’re in. When I heard that annual mortgage insurance premiums were going up, I wasn’t quite sure I believed it. We survived the recession and our housing market here in Oklahoma City is slow but still rolling. Why would they do this to us!?!

A while back, the Senate passed an approval for an increase in insurance premiums on your mortgage. It isn’t all bad…they’re increasing insurance premiums so as to maintain the financial stability of the Federal Housing Authority’s (FHA) Primary Mortgage Insurance (PMI) sources. No one likes to pay insurance; however, strengthening these sources ensures that lenders will still be able to provide home loans even in times of “economic volatility” and this helps provide long term stability in the housing market. It may have a short term negative impact to the market as debt/income loan qualification restrictions will reduce the amount a borrower can qualify for with the increased PMI premium.We hope that it won’t be a significant impact and we also hope there will be a resurgence of secondary loan options that bypass the PMI requirements. Most importantly, if you are considering a new mortgage then you should do it before April 18th to avoid the increased insurance premium.

We’re not trying to push you, but if you think you will have a hard time affording your dream house now, the bps (basis points) will be increasing from 90 to 115…and this translates to a higher monthly payment for that dream home. If you thought about getting a 15 year FHA loan, you might want to do some research and talk to a loan officer because the monthly mortgage insurance premiums on 15 year amortizations are going to double. I’m by no means a mortgage expert but in order to accommodate this increase, you should consider being under contract for a home before April 18, 2011 or saving for a higher down payment.

According to the letter released by the Department of Housing and Urban Development, the difference it will make in your budgeting shouldn’t be too significant. The example they give is $163,000 sales price with the 3.5% down will be a $33 increase per month so don’t get too discouraged. I guess that about sums it up!

And, as always, we’re here to inform, empower, and assist! If you have any questions or would like us to refer you to a good loan officer, feel free to email us at theallengroup@sellingoklahoma.com or call us at 405-509-9350!

Anya
The Allen Group

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