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Changes in Financing

 

As of April 1st FHA raised fees associated with new loans. This adds to several hikes over the past few years. In times not far gone, FHA was the go to loan for most first time buyers since it was the only one that was available for buyer’s that had less than 20% to put down when buying a home. FHA premiums rose effective April 1st. The annual mortgage insurance premium (MIP) for FHA loans increased by .10%. On a $200,000 loan that will mean an additional cost of approximately $200 per year.

 

As the conventional loan market has loosened the number of conventional loans has grown. In March 2013, the total number of conventional loans outnumbered FHA in the state of Georgia. Statewide in March, of all sales conventional loans were 25% and FHA loans were under 19%.  Cash is still king and in March accounted for almost 37% of all purchases in our state.

 

I expect to see the number of FHA loans drop. Another hit will come beginning June 3, 2013 when FHA will require FHA buyers who put down 10 percent or less (which is most FHA buyers) to pay mortgage insurance (‘MIP’) for the life of the loan. Currently MIP drops off when the loan balance reaches 78%. This adds a significant cost over the life of a 30 year loan.

Source: Georgia MLS Statistical Reports

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