FHA mortgage insurance premiums have increased for all loans that have FHA case numbers dated April 1 or later. The increase is very slight: just 0.1% annually, or a bit less than $17 a month for a $200,000 loan.
A bigger change occurs on June 3. For all loans with FHA case numbers after that date, mortgage insurance lasts for the life of the loan, regardless of the amount of equity that a borrower has in the property. Although this change is dramatic, keep in mind that FHA mortgage insurance is based on the current loan balance, and adjusts down every year. Even though the mortgage insurance will last for the entire loan term, it will decrease each year.
These changes will have very little effect on the housing industry. The small monthly increase in housing payment is negligible. However, the changes could have an effect on your individual production if you tell your buyers that FHA loans are terrible. FHA loans are easier to qualify for than conventional loans (that is the whole purpose of the FHA loan program - to get more people into houses). If your buyers can only qualify for an FHA loan, and you have told them to stay away from FHA loans, they are probably going to use another real estate agent. We see this happen all the time.
When we pre-approve a buyer, we always price the loan as a conventional loan and as an FHA loan. We recommend that the buyer get whichever loan is cheaper for them. For buyers who only have the minimum amount down (3.5% of the purchase price) and whose credit scores are lower than about 700, FHA will continue to be the cheapest option.
Don't fall for the hype about how bad FHA loans are going to be. It's just marketing by lenders who aren't approved to sell FHA loans.
Getting a loan approved is easy - if you know what to do. The Mortgage Experts know what to do!!!
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