New FHA Home Loan Info

We received the following email that offers a good explanation of the new FHA loan rules. If you have not heard, FHA loans have changed recently and the amount you pay for mortgage insurance has been reduced. This is great news and makes buying a home with an FHA backed loan much more affordable. Below is what was sent to us:

I am calling this mortgage moment “By the Numbers (since the numbers never lie) to address the new lower monthly reduced mortgage insurance rates for loans insured by FHA. I am including comparison tables of FHA loans with 3.5% Down Payment compared to Conventional loans with either 3% or 5% down payment as well as including one table with a down payment loan to illustrate the different choices potential home buyers now have.

Additionally, any of your clients that have purchased a home between the springs of 2009 and now, should have a free mortgage evaluation for a FHA streamline refinance. In most cases this will lower their monthly payments significantly especially if they purchased a home after April 1 2013 when MI rates were last raised.

Now for the good stuff J

First of all it is obvious that the push for the first time home buyer is in full swing with easier qualifying ratios, reduced down payments and the ability to qualify for a higher priced home. In fact realtor commissions are likely to increase $500.00 per deal on average with the ability to qualify someone for a larger purchase price. Also since this comes on the heels of Fannie and Freddie’s new first time home buyer program, I won’t be a bit surprised to see them respond with lower g-fees or loan level price adjusters to become more competitive with FHA the in rates.

For now here is a break down comparison of FHA vs Conventional using Thursday’s rates. I selected a $100,000 property so everyone can take the monthly payment and multiply it easily for your price point. Example if the home is $175,000. just multiply the monthly by 1.75- $162,000 multiply by 1.62.

These tables are for educational and illustrative purposes only they do not have an *APR and everyone receives an individual rate quote independently.
Home Purchase Price $100,000 FICO 720

FHA

 

Conventional

 

Conventional

Rate

3.75

Rate

4.250

Rate

4.125

LTV

96.5

LTV

97

LTV

95

down P

$3500

down P

$3000

down P

$5000

loan amt

$98189

loan amt

$97000

loan amt

$95000

 

 

 

 

 

 

P & I

454.74

P & I

477.18

P & I

460.42

Ins

50

Ins

50

Ins

50

Tax

100

Tax

100

Tax

100

MI

68.35

PMI

88.92

PMI

49.08

 

 

 

 

 

 

Total/mo

$673.08

 

Total/mo

$716.10

 

Total/mo

$659.50

Home Purchase Price $100,000 FICO 700

FHA

 

Conventional

 

Conventional

Rate

3.875

Rate

4.375

Rate

4.25

LTV

96.5

LTV

97

LTV

95

down P

$3500

down P

$3000

down P

$5000

loan amt

98189

loan amt

97000

loan amt

95000

 

 

 

 

 

 

P & I

461.72

P & I

484.31

P & I

467.34

Ins

50

Ins

50

Ins

50

Tax

100

Tax

100

Tax

100

MI

68.35

PMI

105.89

PMI

70.46

 

 

 

 

 

 

Total/mo

$680.07

 

Total/mo

$740.20

 

Total/mo

$687.80

Home Purchase Price $100,000 FICO 660

FHA

 

FHA with 2nd

 

Conventional

Rate

4.00

Rate

4.75

Rate

4.75

LTV

96.5

LTV

96.5

LTV

95

down P

$3500

down P

$500

down P

$5000

loan amt

98189

loan amt

98189

loan amt

95000

 

 

 

 

 

 

P & I

468

P & I

506.00

P& I

495

Ins

50

Ins

50

Ins

50

Tax

100

Tax

100

Tax

100

MI

68.35

PMI

68.35

PMI

91.04

 

 

2nd mtg

33.95

 

 

Total/mo

$686.35

 

Total/mo

$758.30

 

Total/mo

$736.04

Before everyone freaks out about the rates I’ve selected, you need to know that these are not the low-ball rates advertised if you had an excellent credit score and were putting down 20%. The reality is rates change every day and are affected by FICO score, how much your put towards the down payment and which loan program you select. Please also note the changes in the pricing of the mortgage insurance. The bottom line is higher credit score buyers with bigger down payments are obviously doing better than moderate credit with lower down payments, but the difference is insignificant as long as property values are going up.

We hope this information is helpful. The bottom line is if you got an FHA loan in 2013-2014, you may be able to modify this loan and reduce your mortgage insurance fees, thus you monthly payment.

Best to you,

The Urban Team
7600 N 16th St #100
Phoenix, AZ 85020
602-234-5777

Leave a Comment