On April 5, things changed. No news there; things have been continually changing in the mortgage lending world for some three years now.
But this one will affect a lot of Atlanta home buyers, since so many are finding that FHA loans are the best for their circumstances. And even though Atlanta FHA loans are a bit more expensive, it is still very attractive financing.
The Up Front Mortgage Insurance premium, commonly referred to in industry jargon as Up Front MIP, corresponds to half of a PMI payment, only this part is rolled into the loan rather than being paid monthly. And the up front portion has risen from 1.75% of the loan amount to 2.25%.
That means that for one buying a home and financing a $200,000 loan, then the Up Front MIP was $3500, for a total loan amount of 203,500.
Now, at 2.25%, the same $200,000 base loan amount will carry an Up Front MIP of $4500, for a total loan amount of $204,500. That extra Grand, in this case, is being charged by HUD to compensate for the rising foreclosures and deliquencies they have seen over the past few years.
So for a great rate with a low down payment, FHA is still an excellent option. And, compared to the monthly PMI payment on a conventional loan, FHA is still just over half the cost monthly. And that, in itself, is attractive savings.
