Did you know there is a big FHA rule change coming soon that will greatly affect your monthly payment if you are planning to buy a home? This is not some little thing that only your accountant would care about, this FHA Rule change will hit you hard in the pocketbook!
FHA Loans are Ideal for First Time Home Buyers
FHA has always been a great way for first time home buyers to get a loan. People who have to struggle to come up with the cash for their downpayment or who have certain credit issues have been using this type of loan to buy their first home for years.
The only catch with using an FHA loan is if you put less than 20% down (the minimum is only 3.5% on FHA) you have to pay whats called mortgage insurance premium or MIP for short (most people call it PMI). This is a costly extra monthly fee that gets tacked onto your house payment.
One of the reasons that people have been willing to pay this FHA mortgage insurance is that it was temporary. Once you had made enough house payments to reach 20% equity, the MIP would disappear and your payments would go down considerably.
FHA Rule Change is Coming Really Soon!
As of June 1st, this will no longer be the case. This is hugely important to you if you are thinking of buying a home anytime soon!
As of June 1st, 2013 the FHA the current MIP cancellation policy is going away. PMI WILL NEVER GO AWAY!
You will have to continue to pay this extra charge for the entire life of the loan!
Beat the New June 1st FHA Rule Change and Buy a Home Now!
June 1st is only 30 days away, but don’t panic! You can get it done.
You see you don’t have have your new home closed by June 1st, you just need to have to an FHA case number. FHA case numbers are assigned early in the transaction process. How long does it take to close on a house?
Technically, you don’t have to be close your home purchase by June 1st, but ideally, you will want to find a home and make an offer on it now. You want to open escrow ASAP – opening escrow means making an offer, having it accepted by the seller and giving your earnest money check to the title company – to make sure the house you want to buy is going to pass inspections and appraisal. This way, if it doesn’t, you’ll have time to find another property.
This rule change will not affect anyone who already has and FHA loan, only those buyers getting new loans after June 1st 2013.