The Federal Housing Administration recently announced changes in the way that AMI is handled. The new policy mean that most future home owners will be required to keep Annual Mortgage Insurance for a much longer period time frame, possibly even for the life of the mortgage! This is a change that will have borrowers hurting as it adds many thousands of dollars to the price of the loan. If you want to have your loan be covered under today’s rules, where you are able to end the insurance after just 5 years if you own 20% of the value of your home, you need to act quick. Only home loans completed after the 3rd of June will apply to the new rules.
Because of the time necessary to get a loan approved, mortgage guru’s are recommending that you apply before May 24th. The sooner the better says Washington Mortgage Broker Hank Williams. He thinks that the closer to the deadline the more in a rush people in his industry will be attempting to get these home loans done before the rule changes takes over. To avoid running out of time and sacked with several thousands in extra charges he asks you get started as early as possible.
Under the today’s rules the FHA lets you stop your PMI any time after 5 years when you own a minimum of 80% of the home. For a home owner with a loan to value (LTV) ratio over 90%, the FHA will collect this payment for the length of the loan. If you only borrow 78-90% of LTV you will continue to pay the fee for a minimum of 11 years, and until you get to 78% LTV. This is quite an expensive difference from the current policy.
Additionally in the news the FHA recently announced they would be upping the annual mortgage insurance rates starting April 1st. The premiums will go up 0.1%, or $100.00 per year for every $100,000 of the mortgage. This is not a terribly large amount, but in this tight economy, every dime counts. If you wanting a home loan for more than $625,000 with a home loan longer than 15 years, the new amount will be slightly lower at 0.05% This comes out to $50 for every $100,000 that you borrow. There are other things that might cause it to be lower, but the point is to avoid charged these ridiculous fees you need to act now!
If this is something you would like to avoid, New Jersey Mortgage Broker Mitch Keeler recommends filing for your mortgage no later then the March 25th. It is very important to know that you need to have an FHA loan prior to April 1st. Waiting until after, loans will contain the higher fees.
The change in the rules took effect because of the consequence the bursting housing bubble has had on the federal program that backed all of the loans that were being seized. The fed is trying to refill its coffers so that it can keep to back loans for future borrowers. This new rule will end up costing new home owners more, but should protect the federal backing of mortgages for years to come. Without this program it is quite likely that far fewer people would qualify for home loans. Now is the time to act if you are shopping for a house. If you wait too long new rates start that will cost you thousands of dollars. Speak to a lending expert now who can help you get the home of your dreams.