For those Farragut buyers planning to use a FHA mortgage to buy a Farragut home, things are changing yet again. So, what exactly are the changes to FHA mortgages that are coming? And, what does it mean to you as a Farragut Home Buyer? Read on to find out more.
Earlier this year, the FHA made changes with an increase in mortgage insurance premiums. This new change went into effect for Farragut home buyers starting April 1st. The changes increased mortgage insurance premiums by 10 basis points (.10 percent annually) for all loan terms between 15 and 30 years. For jumbo loans ($625,000 or more), the mortgage insurance premium will go up by 5 basis points of (.05 percent annually). To put these figures in perspective, for a $100,000 loan, this would mean an increase of roughly $8 per month.
There are additional changes going into effect on June 3. Starting Jun 3rd, the FHA will changes its cancellation policy for mortgage insurance premiums. In the past, one a Farragut homeowner’s loan reached the 78% loan to value mark, a homeowner was able to cancel their mortgage insurance premium. Under these new guidelines, certain Farragut buyers will no longer be allowed to cancel their mortgage insurance premium for the life of the loan. For all Farragut borrowers with a loan to value ratio of greater than 90%, they will be required pay a mortgage insurance premium for the life of the loan. For all Farragut buyers with a loan to value ratio of less than 90%, they will be required to carry mortgage insurance for the first 11 years of the loan.
For all Farragut buyers that are assigned an FHA case number before these dates, these changes will not apply. These new mortgage insurance premium guidelines do not apply to FHA streamline refinances. While these changes do increase charges associated with FHA mortgages, they are still a great loan for buyers.
Are you thinking about buying a Farragut home this year? Please let Knoxville Home Team know if there is anyway we can assist you in your Farragut home search. You can contact Rick via phone at 865-696-9002 or via email at [email protected]. You can contact Kati at 865-392-5880 or via email at [email protected].