How The New FHA Home Loan Changes Affect You | Mortgage

How The New FHA Home Loan Changes Affect You

The new FHA Mortgage Loan changes went into effect on Monday, October 4, 2010. The changes to the FHA mortgage program include a reduction in the upfront Mortgage Insurance Fee, but also include an increase to the annual mortgage insurance. The result to several home owners is a lower loan amount, but an increase to the monthly payment.

by DavidGWhite

The new FHA Loan changes went into effect on Monday, October 4, 2010. The changes to the FHA program include an increase in the annual mortgage insurance premium as well as a reduction in the upfront mortgage insurance fee. The result to a lot of home buyers is a lower mortgage amount, but a higher monthly payment.

FHA made these changes due to the current nature of the home loan environment and to also help reduce the loss in foreclosures. Any new FHA case number ordered after October 4 will be required to use the new FHA guidelines.

So what does this mean to a future home buyers?

Ultimately, the largest change in the new FHA home loans is the annual mortgage insurance cost. This has a direct impact on the mortgage loan payment. The new changes will see a rise to the monthly mortgage payment. For example, a $100,000 FHA loan will see an increase to the monthly mortgage payment by $29.17. This can play a major role in a homeowner's ability to get approved for a FHA mortgage if they have a high debt-to-income ratio.

Home Owners with extremely high debt-to-income ratios will have to consider paying off some debts before purchasing a house or consider an increased down payment to offset the increase in monthly payment.

Even with the changes to the FHA mortgages, these types of loans are still fantastic for first time home buyers and people searching for loans with low down payment options.

FHA home loans also offer home buyers lower rates and have more flexibility when it comes to seller concessions. FHA mortgages also offer the ability for the down payment to come from a gift from a parent or family member.

It is crucial when buying a new house that you talk to a loan adviser to discuss all your mortgage options and see which mortgage program best meets your needs. Since there are several types of home loans, it is crucial to get all the information you can so you can make an educated decision.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

David White is a Sr. Mortgage Consultant who specializes in home loans. He has over 12 years experience helping his clients with their Southlake home loans.