Ready to add $166 per month to your Tri-Cities WA FHA house payment???
Yesterday the US House of Representatives passed HR 5072, the FHA Reform Act of 2010, by a nearly unanimous 404 to 4. Now it’s on its way to the Senate. So, what does this mean to you, the home buying (or selling) consumer?
FHA would be able to increase the current mortgage insurance premium (MIP) program from the current rate of 0.55 percent to 1.50 percent.
Let’s break that down to math taught by Mrs. Gale, my 4th grade teacher in Richland. If you go get an FHA loan (whether to purchase or refi) after this is passed by both houses of Congress, and you aren’t either putting 20%-plus down payment or have that much in equity if refinancing, then you have to pay the MIP.
If your loan is $200,000 and was at, say, 5%, the new increase in interest rate basically makes your interest rate 7.010%, increasing your payment by a whopping $166 per month!
Hey, Tri City home buyer? Got a problem with that??? Best be shooting off a note to your US Senator telling them how you feel about this! Because your US Representative sure didn’t give a hoot about how this would affect the Tri Cities housing market when they passed it!
And lest you think this just affects buyers, let’s take a look at the seller side of the equation. Homebuyers in the Kennewick, Pasco and Richland are qualified for their mortgage based heavily upon their debt to income ratio. If their bank adds $166 to the cost of their mortgage payment, they very likely just got priced right out of purchasing your home from you!
How the heck this helps the economic recovery in this country is beyond me! It really doesn’t do anything except put more money into the pockets of the banks.
