Robert Collins of Wells Fargo reminded me today that FHA Mortgage Insurance rates are going up. The current up-front premium is 1.5% of the loan amount, but on April 5, 2010 it goes up to 2.25%!
On a $500,000 purchase, that’s an increase in premium from $7,238 to $10,856, not chump change. One new alternative Robert can offer to well qualified buyers of Orange County Real Estate is a Conforming (non-FHA) loan with a down payment of only 5%.
On a $500,000 purchase, the increase in down payment (from 3.5% to 5%) would be $7,500 – about the same as the current FHA insurance premium, and about $3,500 less than the new premium! Why not put that cash towards equity in the home?
Originally Posted at Orange County Real Estate
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