A Little Fed and a lot of FHA
I heard the Tavern on the Green in Central Park is or has just closed. Here is a picture I took while there last September. Many people remember this place by the manicured animal shapes like this one.
The Fed says that the Fed’s Mortgage Backed Securities purchase program (see previous post), will end March 31st. Overall this news was taken bad as rates got a little worse yesterday.
Also in a previous post, I commented on FHA changes. Well it looks like the date for the increase in up front mortgage insurance (UFMIP) is April 5th. The increase, just days after the Fed stops buying MBS’s, takes the UFMIP from 1.75% of the loan amount to 2.25%. If you look at a $300,000 purchase price, and use FHA with the minimum 3.5% down, after April 5th your UFMIP will be $1,582 higher! This is can be a problem for a lot of people. I know, because I see how people struggle to save just enough for a down payment and closing costs.
It is true that UFMIP can be, and usually is financed into the loan amount, how ever that means higher payments. While the impact to payments is low, those buyers who are already on the border for qualifying will be affected.
At some point the cap for seller credits will come into play as well. Currently a seller can credit 6%, but FHA will shrink that to 3% sometime soon.
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Thank you,
Matt Steinmetz
Envoy Mortgage- Voted Top 25 Tech Savvy Lenders by Mortgage Technology Magazine
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Tags: california, Concord ca, contra costa, envoy mortgage, fha, first time buyer, matt steinmetz, mortgage insurance
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