Today's KCM Blog Post: "Yet Another Reason to Buy Now!"
Last week, HUD announced their intention to change their insurance premiums, in order to raise HUD’s own reserves to cover anticipated losses and fund their operations. Let’s look at the impact on today’s home buyer, resulting from the changes which will go into effect on September 7th.
The “spin” is that they are trying to reduce the closing costs to buy a home by lowering the Up Front Mortgage Insurance Premium (UFMIP) from 2.25% to 1.00%. On a $300,000 loan, the borrower will save 1.25% on $300,000 or $3750- a significant number no doubt. BUT, that amount can be financed into the mortgage; therefore, at 5%, the borrower’s monthly payment will only be reduced about $20 a month. Yes, $20 a month for 360 payments would be a big deal, but since most people are more concerned with their monthly payment than loan amount, let’s look at the other change to the insurance premiums…
