There is big news in the Mortgage world for FHA clients.
The Federal Housing Authority has changed Mortgage Insurance Guidelines and they go into effect on June 1st, 2013. This change makes Mortgage Insurance PERMANENT. No longer can you eliminate Mortgage Insurance by paying down you mortgage or having appreciation enough to bring your loan below 80% of value.
Mortgage Insurance on FHA loans is typically $100-$300 per month. Before this change, clients could expect to pay that for 5 years or so. The total cost would typically be $6,000 -$20,000. Now, with it becoming permanent, the lifetime of mortgage insurance could cost $20,000 -$100,000. Of course, a client can always refinance out of an FHA loan, but there is no guarantee what their rate will be in five years or more.
Solutions:
1) Refinance your FHA loan now at historically low rates before June. Value / Equity are not an issue with FHA streamline refinances.
2) If you have a little equity (3-5%) you can refinance into a conventional product without monthly mortgage insurance.
If you have questions about your options, contact me by phone or email.
Brent Wood
702-629-9555
bwood@allwestern.com
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