Denver Real Estate

HUD to Raise Mortgage Insurance Premium Starting April 1, 2013

This is no April Fool’s prank.  HUD just announced they will raise the rate on Mortgage Insurance Premium (MIP) on most FHA loans by 0.10 points beginning April 1, 2013.  Not only that, they will continue to charge borrowers MIP for the entire term of the loan.  This is a departure from the past 10-years or so when they would drop the MIP after the principle of the loan was paid down to 78%.

What does this mean?  It means that borrowers will have less purchasing power.

So why is HUD making these changes, just as the housing market appears to be turning around?  According to HUD, they need the extra revenue the increased premiums will generate.  Unfortunately, some experts believe the increase will make access to these loans more difficult.  Especially for first time home buyers, who are the buyers most likely to turn to the FHA loan for financing.

That is why I think that anyone that is currently on the fence about purchasing a home needs to speak to a lender and get pre-approved, right away.  You don’t need to close on a home by April 1st, you just need to get a HUD case number assigned to your loan before then (which I believe happens at the time of appraisal).

Once buyers have the financing in order, my next suggestion would be to work with a Realtor to find your new home.  Obviously I am more than willing to assist.  Please give me a call, before it is too late.