Folks seeking FHA Pre-Approvals Sonoma County will be paying more post April 18, 2011. The monthly mortgage insurance premiums are in fact being increased by a .25% on 30 year and 15 year fixed-rate mortgages beginning on April 18, 2011.
For Sonoma County first-time home buyers and folks seeking FHA Pre-Approvals Sonoma County this represents anywhere between $30-$70 more per month in mortgage payments when we are already dealing with higher interest rates from late 2010. This change to FHA insured loans is to keep FHA mortgage loans as cost effective as possible for the federal government. The Federal Housing Administration FHA has suffered losses from loans originated from 2006 to 2008. Back then buyers seeking FHA Pre-Approvals Sonoma County were permitted to use a program called DAP. DAP was a program otherwise known as down payment assistance that allowed first-time home buyers taking out FHA loans in Sonoma County to acquire funds from the seller for the down payment to purchase the property. Since then the down payment assistance program has been eliminated. Since 2008 these loans have performed extremely poorly according to HUD. Because of the lack of performance from these loans over time, FHA’s mutual mortgage insurance fund has fallen below its congressional mandated threshold of a 2% capital reserve ratio. This capital reserve ratio is for HUD to continue to allow FHA loans to be originated. The capital reserve ratio is the safety net if you will for the Federal Housing Administration, its what allows people to get FHA Pre-Approvals Sonoma County.
Since November of 2010, FHA’s capital reserve ratio has been under 2% so FHA has to compensate for that by increasing the monthly mortgage insurance premiums for new loans being originated. It’s anticipated that this .25% increase in new FHA home loan originations will generate around $3 billion in 2011. For loans originated on April 18 or after here is how the breakdowns will work FHA Pre-Approvals Sonoma County:
For 30 year fixed-rate loans loans with 3.5% down payments, there will be a 1% upfront mortgage insurance premium and a monthly mortgage insurance premium of .115%. If the financing contains 5% equity or a 5% down payment etc. there will be a 1% upfront mortgage insurance premium and the monthly mortgage insurance premium otherwise known as MIP of .110%.
On a new Sonoma County 30 year fixed-rate FHA mortgage loan here is an example of how the payments will change assuming a 4.875 home loan interest rate:
$300,000 purchase price
3.5% down payment= $10,500
$289,500 loan amount
1% upfront mortgage insurance premium $2895
Current MIP .90% $217.13 per month
Financed loan amount=$292,395
Principal and interest payment $1,547.38 + $217.13= $1764.51 Presently
On or after April 1 exact same scenario:
$289,500 loan amount
1% upfront mortgage insurance premium $2895
New MIP .115% $277.44 per month
Financed loan amount equals $292,395
Principal and interest payment $1547.38+ $277.44= $1824.82 per month
So on a new FHA Sonoma County Home Loan the same house April 18, 2011 with the same interest rate is going to cost an additional $723 per year or $60 per month to have the ability to put 3.5% down to purchase a home in Sonoma County. So if someone qualifies to get a loan FHA Pre-Approvals Sonoma County the other monthly debt considered.
For folks seeking FHA Pre-Approvals Sonoma County the time to get pre-approval is now.
On a higher priced property in Sonoma County increased FHA mortgage insurance premiums will be higher due to a higher loan amount. It seems as though FHA is indirectly applying pricing adjustments to people with 3.5% equity. The mortgage insurance premiums are only five basis points lower for folks with additional 1.5% equity. In other words at some point down the road, FHA is likely going to increase the minimum down payment contribution to purchase a home in Sonoma County to 5%. This will also affect people refinancing mortgages who have high loan to values and may not have that 5% equity in their home.
For Buyers seeking FHA Pre-Approvals Sonoma County make sure your loan officer is aware of these changes.
Because of this change, it is extremely important for Sonoma County first time home buyers seeking pre-approval to align themselves with a Sonoma County FHA lender who can properly guide them through the phase into homeownership. There are lots of mortgage brokers in Sonoma County as well as big bank’s. The ideal place to go is direct lender who can close in 25 days or less, and is Full Eagle Direct Endorsement Underwriter for HUD. For your next FHA Pre-Approvals Sonoma County Feel free to give me a call Scott Sheldon, FHA Lender 707 217-4000.
