FHA loans are the largest source of low-down payment mortgages. A buyer with less than stellar credit can purchase a property with as little as 3.5% down. Starting April 1st, the FHA will institute it’s third increase since 2011 when it raises it’s premiums by 1/10 of a percent, or 10 basis points.
Then, on June 3, FHa loans will be harder to qualify for whenthe debt to income ratio is is increased to 43% for individuals with a credit score of 620 or less. In addition, a minimum of 5% down will be required on loans over $625,000 and borrowers will no longer be able to eliminate the PMI insurance when the balance reaches 78% of the loan value. Instead, an FHA borrower will pay PMI over the entire life of the loan. A recent analysis of the upcoming changes was conducted by Steven R. Maizes, with Mortgage Capital Partners Inc. in Los Angeles. He concluded that an FHA applicant with a 720 FICO score and 3.5% down payment would pay $144.66 more per month on a $250,000 fixed rate 30 year mortgage than if he took out a conventional mortgage with 5% down and paid PMI.
If you are a buyer with a lower credit store and a low down payment, you may want to jump into the market before April 1. And this isn’t an April Fools joke.
Okay, I have to admit that although I love my husband, family, friends, clients, south Florida, referrals, wine and dark chocolate, but am not a big fan of Valentine’s Day. As my husband said early on in our dating, every day should be Valentine’s Day, not just a day where flower prices sky rocket, restaurant reservations are scarce, and Hallmark cashes in. So instead of celebrating just one day, go out and celebrate all weekend! There is so much to do between the boat show and Coconut Grove Art Festival that you will find plenty of reasons to love living in, or visiting, south Florida.
