Changes to FHA loans this spring and summer will make their terms more expensive, so time is of the essence to apply soon to keep your payments low.
With an FHA insured loan, you (the buyer) pay 3.5% down, as opposed to the traditional 20% down on the cost of a house. In exchange for this low down payment, you must pay mortgage insurance. This monthly payment usually phases out when a buyer reaches a secure level of equity in the house. But all that will change June 3rd of 2013.
Instead, for loans begun with less than 10% down payment, the mortgage insurance premium will be required to be paid during the entire life of the loan, becoming a permanent part of the loan.
There is still time to get an FHA mortgage (where the insurance premium gets phased out) before the June 3 rule change, by applying for an FHA loan and having the lender assign a case number for your loan before the deadline. But: in order to get a case number, which is assigned to a particular property, you must have an accepted offer on that property.
The closing date in this case is irrelevant, but the issuance of the case number is decisive.
In addition, the annual mortgage premium on new FHA loans (those with case numbers issued after April 1, 2013) will rise from 1.25% per year to 1.35% per year.
How this all washes out is: the can't-get-out-of-paying-it mortgage insurance on an FHA will more than double over the whole term of a thirty year loan...if you apply (and don't have an accepted offer on a house) after June 1st, 2013.
(But remember, a 10% or more down payment means you don't have to pay mortgage insurance at all...)
If you're interested in starting the process and finding a home, get in touch with me and I will set you up with a terrific lender who can pre-qualify you.
