Beware April 18, 2011. It will be a day of change for anyone thinking of purchasing or refinancing an Indiana home using an FHA mortgage.
A little background first… FHA does not make loans as many people believe. The Federal Housing Administration (FHA) under the Department of Housing and Urban Development (HUD) only guarantees the loans. With Big Brother in your corner, there is less risk of loss of the lenders so they are willing to offer lower interest rates. Keep in mind that lower risk = lower rates and vice versa.
Currently, all 30 year FHA loans require the borrower to pay for mortgage insurance, as well as any loans over 90% loan-to-value for a 15 year term. Right now, all 15 year loans with a loan-to-value (LTV) less than 89.99% do not require MI. That’s changing!
Effective April 18 of this year, ALL monthly mortgage insurance premiums will increase by .25%. This includes the 15 year loans with the lower loan-to-value ratios. As in the past, the monthly premiums were paid for 5 years or until the LTV is 78% or less WHICHEVER COMES LAST!
If you are planning to purchase or refinance a home using an FHA-backed loan, I would suggest that you consider acting on it prior to April 18. While 1/4 of 1% does not seem like much, it all adds up when we are dealing with large sums of money; approximately $250 a year for every $100,000 borrowed.
Need an alternative? How about a NO money down loan with NO monthly mortgage insurance fees? I have those at great interest rates!
If you have questions, please feel free to call me at 219-695-0369 or email scott@nwiloanguy.com.
Scott
Your Indiana mortgage expert specializing in FHA, VA, and USDA Rural Development loans.
Need cash to buy or refinance a home and make repairs or improvements? Ask about our FHA 203(k) Rehab loans.