Mortgage insurance is required on all FHA insured home loans and is one of the most popular loan programs for Austin home buyers. FHA requires two mortgage insurance premiums, upfront mortgage insurance equal to 1.75% of the total loan amount (this portion can be financed) and annual mortgage insurance added to your monthly payment.
How Much is FHA Mortgage Insurance Now?
Currently, the annual mortgage insurance premium is 1.25% if you have less than a 5% down payment available, 1.20% of the loan amount if you have a 5% down payment.
How Much Will the Increased FHA Mortgage Insurance Be?
FHA has announce that they will increase the annual premium another .10% in the first quarter of 2013 and there are even speculations about increasing the annual mortgage insurance premium to as high as 2.05%.
Use Conventional Financing with Less Money Down than FHA
Surprisingly enough, many home buyers believe that you have to have a 20% down payment to use conventional financing and avoid the costly expense of the two mortgage insurance premiums required when using FHA financing.
Not only does conventional financing allow you to buy a home with a lower down payment, 3% minimum as opposed to 3.5% minimum if using FHA, conventional financing offers more creative and more flexible mortgage insurance options.
Alternative Mortgage Insurance Options
The mortgage insurance required with Conventional financing is called Private Mortgage Insurance, or PMI. While there is no way to buy a home with less than 20% down without mortgage insurance, there are two PMI programs that will not require you to pay a monthly mortgage insurance premium in addition to your mortgage payment.
Single Premium Private Mortgage Insurance
A single premium mortgage insurance policy allows you to pay then entire policy one time, up front and does not require monthly payments. An informed and creative lender will tell you that the single mortgage insurance premium can be paid by the seller using seller concessions, or can be paid for using a closing cost assistance program.
Close Before 2013 and Save Money
If you act quickly, and close before 2013, you can still save money and get the home you want. We have helped several buyers over the past couple of decades and can help you too. If you want to explore the possibility of owning a home and taking advantage of low interest rates before the fees go up, check out our Austin Home Buyer Representation Program to find out how we can help. Then, call us at (512) 827-8323 or email us at info@11OaksRealty.com to schedule a no obligation consultation.
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