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FHA is Changing! Here is What YOU need to Know!

by Pat Argo

The 3.5% down payment on FHA loans could be more expensive for buyers than expected. Beginning April 1, 2013, the mortgage insurance premium will go up by .1% to 1.35% which may not even be noticeable to most would-be homeowners.

The staggering increase will occur on 6/3/2013 when FHA's policy on the duration of the required mortgage insurance will be increased for the life of the mortgage. It basically doubles the amount of total MIP if the loan is paid to term.

 Example: Purchase Price $175,000 
with 3.5% down payment at 4% mortgage rate on 30 year term

 

Current

After 6/3/13

MIP duration

78% of original loan

Life of mortgage

Cumulative premium

$20,838.24

$42,447.93

Currently, the MIP is required for approximately 9 years 9 months with normal amortization. The new program would require the MIP for the life of the loan. In this example, the initial monthly MIP is $196.88 which decreases based on amortization.

There are buyers that qualify on income and credit who may not have the necessary additional down payment required for 80% and 90% conventional loans. The 3.5% FHA program has provided a great vehicle to get into a home with a minimum amount of cash.

For homeowners that expect to stay in their home for ten years or less, the new changes might not have much financial impact. Homeowners who expect to be in their home long term can refinance with a conventional loan without mortgage insurance once the equity has increased due to amortization and appreciation.

For buyers to avoid these increases, they will need to act now to get the FHA commitment issued prior to these change dates.

Show It Off!

by Pat Argo

 

If it shows better, it will probably sell faster and maybe for more money.  Once your home is on the market, it's time to look at it like a commodity and through the eyes of potential buyers. In all likelihood, you'll need to take care of these items eventually, so do them now to help it sell sooner.

  1. Make repairs - it doesn't matter if it's been that way since you bought it. You need to fix it so that the buyer doesn't think that the rest of the house is about to fall apart.
  2. Not too personal - you may have bought your home to express yourself but if the buyer can't see themselves in the home for all of your things, it's going to take a lot longer to sell than you want.
  3. Drive-up appeal - the old saying "you never get a second chance at a first impression" applies to your home, too! They may never even get out of the car to come inside.
  4. The nose knows - it may not smell like home but it shouldn't smell like a place where they would never consider living.
  5. Neutral colors, decor, etc. - these are not decorating tips you'll see in magazines but the truth is that bold colors and designs are difficult for most people to see beyond. They'll always be able to imagine their things better in neutral surroundings.
  6. Less looks like more - removing some of the non-essential things from your home will eliminate clutter and make the home feel larger. The same suggestion applies to cabinets and closets.
A confused mind will not make a decision. Identify and eliminate items that could derail a potential sale. The preparation you make in the beginning will help the presentation to your potential buyers. There are a lot of other homes  competing for your buyers!

Displaying blog entries 1-2 of 2

Contact Information

Photo of Pat Argo, Broker Assoc, CRS, GRI, RECS, SFR, S Real Estate
Pat Argo, Broker Assoc, CRS, GRI, RECS, SFR, S
Keller Williams Realty of Brevard
6905 N Wickham Road #405
Melbourne FL 32940
Cell/Text: 321-537-4721
Office: 321-259-1170
Fax: 321-435-3124