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Loan costs will increase in April 2012

Crofton MD Real Estate Questions

Q.  Interest rates seem to be relatively stable, so what is the rumor I hear about mortgage costs going up in April?

A.  The U.S. Department of Housing and Urban Development has issued a letter outlining higher costs for all FHA loans initiated after April 9, 2012.

Mortgage Application.jpgIf you don’t find and buy a home in time to apply for your loan prior to April 9, your upfront mortgage insurance will increase from 1% to 1.75%.

Example:  If you obtain a $250,000 FHA loan BEFORE April 9, your upfront mortgage insurance will be $2,500.  AFTER April 9, this cost will be $4,375.

Don’t wait to find and buy a home in time to apply for your loan before April 9, unless you want to pay an extra .75% in closing costs! Most Crofton home buyers would rather spend this money on moving costs, home improvements, or new furniture for their home.

There are other changes, as well, including the monthly mortgage insurance, which is going up. An exception to this is streamline refinancing for existing FHA loans endorsed on or before 5/31/2009 – the MIP will decrease from 1% to .1%.

To view the official HUD letter, dated March 6, 2012, which publishes these and other changes, click on FHA Loan Changes Effective 4/9/12.

Another rumored change, which was not included in this letter, is the reduction of closing cost help allowed for an FHA loan. For now, sellers can still pay 6% of the buyer’s closing costs, if they’re willing and able to do so. Industry insiders expect this to change soon, however.

To search for a home in Crofton or the surrounding areas of Annapolis, Bowie, Gambrills, and Odenton at your own pace and convenience, click on Search for Homes and contact me to look at any properties that interest you.

Copyright 2012. All rights reserved. Margaret Woda

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The purpose of this blog is to provide the latest community and real estate information to relocating home buyers and residents of the greater Crofton area. Please contact me with real estate questions or news about your local organization or business.  I’m happy to share them with other readers of Focus On Crofton.

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