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Rate Update and Changes to FHA

Currently, the 30 Year Fixed is 3.875% (4.036% APR) and the 15 Year Fixed is 3.375% (3.624% APR).

This week is rich in economic news and is sure to move the markets.  After a sleepy Monday (is today a holiday for you?) we will start off Tuesday with the release of the Federal Open Market Committee (FOMC) Minutes.  Wednesday we have the Import/Export Prices report, Crude Inventories, and the United States Treasury Budget.  Thursday we find the lion share of the news and likely the most market moving news, Initial Jobless Claims, Continuing Claims, Producer Price Index, Core Producer Price Index, and Trade Balance.  To round out the week Friday will bring Consumer Price Index, Core Consumer Price Index, Retail Sales, Retail Sales excluding auto, NY Fed-Empire Manufacturing Survey, Michigan Sentiment, Business Inventories.  Needless to say, there will be plenty to talk about around the water cooler!

For those of you who follow loans and affordability; FHA has recently diminished the purchasing power of their clients with the freshly modified Mortgage Insurance Premiums.

FHA recently made changes to the mortgage insurance requirements for all FHA loans.  Until last week they charged 2.25% of the loan amount for the Upfront Mortgage Insurance Premium and a Monthly Mortgage Insurance Payment of .55%.  For example let’s look at a $300,000 FHA loan.  The Upfront Mortgage Insurance Premium would be $6,750 and the Monthly Mortgage Insurance Payment would be $140.45.  Under the new FHA insurance parameters the Upfront Mortgage Insurance Premium has been lowered to 1% and a Monthly Mortgage Insurance Payment has been increased to .90% (2.25% and .55% versus 1% and .90%).  This means under the $300,000 example the new costs are $3,000 for the Upfront Mortgage Insurance Premium and $225 for the Monthly Mortgage Insurance Payment.

This is significant because this increases the monthly costs of this hypothetical FHA loan by $84.55 per month.  At current rates, each $100,000 of mortgage costs $477.42 per month, or in other words each $10,000 costs $47.74 per month.  As its related to FHA, this increase in monthly costs diminished the FHA borrowing power by approximately $20,000.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile
805.543.LOAN info@centralcoastlending.com