Will it be FHA or Conventional Financing?
Weighing Financing Options
after the April 18th, 2011 Changes
Considering the speed in which changes are occurring in the mortgage industry currently, I'm getting hard-pressed to find a new headline that will catch a new home buyer's eye or interest.
Another change?
Ho-Hum ... zzzzzzzzzzzzzzzzz
But THIS change that took place as of April 18th, 2011? HUD increasing FHA Monthly Mortgage Insurance by another 1/4%? It's a change that's going to shake-up the home buying plans and dreams of many new home buyers moving forward.
What exactly does a 1/4% increase in FHA Monthly Mortgage Insurance translate to in dollars and cents?
It means ... for every $100,000 of monies borrowed, borrowers will be paying an additional $21.00 in monthly payment.
And that amount is going to concern many borrowers, both at the time of mortgage application ... and on a monthly basis when budgeting for their households.
Moving forward, I will be making the strong suggestion to my own clients, especially first-time home buyers, that they focus on saving a 5% down payment for their home purchase, if at all possible. The above-mentioned 1/4% increase in FHA Monthly Mortgage Insurance... plus the 1% UPFRONT Mortgage Insurance assigned on all FHA loans (that is typically financed) further adds to the cost of their home loan. And that's of real concern.
Now ... please don't get me wrong. FHA does ... and will ... continue, to have its place and serve a need. But as a mortgage lender, I believe it serves the best financial interests of my mortgage clients to now look much harder at 5% Down Conventional mortgage options more closely. The newly added 1/4% increase in FHA Monthly Mortgage Insurance has possibly changed the lending landscap
e that much.
e that much. Let me point out here that, in order to fairly compare the above financing options (newly increased FHA Monthly Mortgage Insurance option VS 5% Conventional Down Payment option), all other elements of the borrower's financial history/loan file must remain the same ... such as, credit, down payment funds, job history, property type being purchased, condition of property, etc.) Assuming all those criteria are the same, a sound comparison can be made.
Home buyers need to know all the mortgage options that exist for them. After the gathering of all the facts and figures involved in their purchase transaction has been completed, home buyers can then wisely choose their mortgage lending option ... confident that they have been educated and guided by their experienced mortgage professional. They will know that they will benefit from the best mortgage program available for their personal financial scenario.
Important changes took place on April 18th, 2011. Should you be thinking of buying a home, take the time to educate yourself regarding the impact that they might make to your mortgage financing.
* Should you be planning or interested in buying a home in the future, please contact me for information regarding mortgage information and service. It will be my pleasure to assist and guide you to owning your new home. You can contact me at: www.genemundt.com, Direct: 815.277.4036, my cell/text at: 708.921.6331, my email: gene@chicagobancorp.com. Or the contact form on my website at: http://www.genemundt.com/Contact-Info.html
Gene Mundt, Sr. Vice President
Personal NMLS #216987
The Federal Savings Bank
1823 Centre Point Circle, Naperville, IL 60563
Now on Skype! 630-219-1316
