by Meridith Doucette on March 21, 2012
FHA Mortgage Insurance Rates Will Be Going Up on All New Loans Assigned April 9, 2012 and After.
FHA Loans are loans insured by the Federal Housing Administration (FHA). These insured loans minimize the risk lenders face by allowing buyers a down payment less than 20% of the price of the home. FHA Loans offer features that are attractive to many home buyers such as:
- Low Down Payment – as low as 3.5% of the purchase price of the home
- Low Closing Costs – closing costs, mortgage insurance and other fees can be included in the loan
- Easier Credit Qualifications – those who don’t have the credit score or history to qualify for a conventional loan may qualify for FHA financing
Because FHA loans allow a down payment of less than 20% of the purchase price of the home, mortgage insurance is required for these loans. Mortgage insurance premiums on FHA loans are much less than premiums for private mortgage insurance and most of the premium can be added to the loan. For FHA loans, a portion of the Mortgage Insurance Premium (MIP) known as the Up Front Mortgage Insurance Premium (UFMIP) is added to the loan balance rather than being paid out-of-pocket at closing. Then, the remaining portion of the MIP due is added to the monthly payment.
While FHA mortgage insurance premiums will continue to be lower than premiums for private mortgage insurance, FHA mortgage insurance rates will be going up on all new loans assigned April 9, 2012 and after. The UFMIP rate, which is included in the loan, will change from 1.00% to 1.75% of the loan amount. The MIP rate will change from 1.15% to 1.25% of the loan amount. Here is an example of how these changes will impact a loan for $400,000*:
| |
New FHA Loan
(After April 1, 2012) |
|
Old FHA Loan
(March 31, 2012 or prior) |
| Purchase Price |
$400,000
|
|
$400,000
|
| Down Payment % |
3.5%
|
|
3.5%
|
| Down Payment Amount ($) |
$14,000
|
|
$14,000
|
| |
|
|
|
| Interest Rate |
4.25%
|
|
4.25%
|
| Up Front Mortgage Insurance Rate |
1.750%
|
|
1.000%
|
| Mortgate Insurance Rate |
1.250%
|
|
1.150%
|
| Tax Rate |
1.000%
|
|
|
| |
|
|
|
| Loan Amount |
$392,755
|
|
$389,860
|
| |
|
|
|
| Payment 1 |
$1,932
|
|
$1,918
|
| MI Payment |
$409
|
|
$374
|
| Total Payment |
$2,341
|
|
$2,291
|
| |
|
|
|
| Taxes Monthly |
$333
|
|
$333
|
| Insurance Monthly |
$100
|
|
$100
|
| Other (HOA Dues) |
$144
|
|
$144
|
| |
|
|
|
| Total Monthly Payment |
$2,919
|
|
$2,869
|
In the example above, the monthly payment goes up $50 per month. These changes can be compared as having a net effect of raising the interest rate of the loan by .25%. To buy down the interest rate by .25% to get the payment more in line with the former FHA insurance rates would cost about $8,000 out-of-pocket.
If you are planning to purchase a home using FHA financing, save money by purchasing your new home before April 1, 2012 to meet the April 9, 2012 deadline for the change in mortgage insurance premium rates.
*This purchase scenario is used for demonstration purposes only and may not be available at any or all communities. This information is provided for general awareness only, and is not intended for the purpose of providing legal, accounting, tax advice or consulting of any kind.
by Shea Homes Northern California on November 7, 2011
Are you looking to buy a home, but daunted by the process? Shea’s here to help! Our First-Time Homebuyer Workshop is designed to get all your questions answered and maybe answer a few you didn’t know you had.
This free event will allow you to interact and hear from home buying expert Jaime Bargiel, Vice President of Shea Mortgage Northern California. Jaime will give a brief presentation with lots of time for questions after. And we promise, there is no sales pitch or pressure to buy. Just come to learn! And as our guest, enjoy a complimentary continental breakfast and raffle prizes.
What: First-Time Homebuyer Workshop. Topics include financing, available loan programs, estimated payments, what it takes to get pre-approved, renting vs. owning, current loan guidelines and requirements, and more!
When: Saturday November 12th, 2011 from 10 a.m. – 12 p.m.
Where: Mondrian by Shea Homes 465 Chagall Street (*505 E. Evelyn Ave for directions/navigation), Mountain View, CA 94041
RSVP to: michael.lutz@sheahomes.com or margaret.salazar@sheahomes.com, or call (650) 965-3812
Advance mortgage related questions are welcome. Feel free to submit questions or potential discussion topics to Michael (michael.lutz@sheahomes.com) or Margaret (margaret.salazar@sheahomes.com). Please feel free to ask us anything. We can’t wait to see you there!
by Shea Homes Northern California on July 28, 2011
Hello future.
The world has changed dramatically, but sadly most new houses haven’t. At Shea Homes, we thought about how we can transform the way we build and design homes that will reflect our current lifestyles. We even sought out customer input to see what people really want in their homes. What we came up with is SPACES. They’re so different they even have their own lingo. We call bedrooms “sleeps” and bathrooms “splashes.”
FLEXIBLE
By far, the most significant feature our homes offer is flexibility. The open floor plan allows for you to set up the home to fit your family’s life. It’s easy to make the area off the kitchen into formal or family spaces. There are eat-around kitchen islands, a spacious pantry, and a deep garage that accommodates a storage or work space.
by Vanessa Linn on May 13, 2011
I remember the first home I bought back in 1999. I was so scared. I called my lender every day. But I knew in my heart of hearts it was the right thing to do for my family.
I wanted to live in a neighborhood where my daughter would have friends to play with, and I needed a tax deduction. So I saved for my down payment and closings costs, and then borrowed a few bucks from my dad (just for a week).
There were many firsts at my first home: our first Fourth of July block party; my neighbor bringing me dinner when I was sick; and the first time I hosted Thanksgiving dinner. We made friends that will last a lifetime. Would you believe I still get together with my childhood friends from the first house my parents bought?
Besides creating lifelong memories there are several practical reasons to own a home today:
- Interest rates are lower than when your parents and grandparents bought their first home. Ask them, see what they say.
- There are grants (no repayment) available to moderate income families for assistance with a down payment and/or closing costs.
- Your monthly rent payment goes towards paying your landlord’s mortgage payment and taxes. Why not reap these benefits for yourself?
- Some of the things you can deduct on your taxes include:
- mortgage interest
- property taxes
- sales taxes
- mortgage insurance premiums
- To learn more go to IRS.gov
5. When was the last time you ate dinner at your neighbor’s house?
If you need help navigating your way through homeownership or need a new home guide, we are here every step of the way. We have created an entire section on our website dedicated to first time home buying.
What memories will you create in your first home?
