The lender should have read the attached letter (in the email below), Mortgage Letter 2010-28 from FHA, before sending out a scare tactic letter like this. Yes, this is an excellent time for buyers who are considering writing an offer, especially with low interest rates and the upcoming changes to FHA, but please present the facts if you are going to send out letters like this.
This loan officer will not be let loose near my clients. I will continue sending my clients to a loan officer I can trust to tell them exactly what their costs will be. One who has a clear understanding of the FHA guidelines.
Can you imagine how this misinformation could harm a client?
They weren’t qualified for the correct amount and didn’t buy the home they wanted because they thought the payment was too high. Worse yet, they were never given the opportunity to look at a home they would have qualified for.
We are experiencing major changes this year and not just in mortgage financing. It is our job and fiduciary duty to our clients to stay educated about such changes. They are counting on us, especially when they are getting so much news from so many sources. It’s enough to make your head spin.
Please Realtors and lenders, DON’T forward this email!
Email Begins Here————
See attached letter from US Department of Housing and Urban development
This is bad news.
Today if a person is getting a $100,000 FHA mortgage the up front mortgage insurance is 2.25% or $2250 added on top of the loan.
And the monthly mortgage insurance is .55% annually or $45.83 monthly.
Under the new rules – a $100,000 FHA mortgage would have a 1% or $100,000 or less up front mortgage insurance added to the loan (depending on down payment %)
But the monthly mortgage insurance increases to 1.55% of the original loan annually –
On a $100,000 loan that would be $1550 annually or $129.16 monthly-
THIS IS HUGE BAD BAD BAD
This will make it more difficult for people to qualify for a loan.
If you have any buyers thinking about buying using FHA financing – the drop dead date is Oct 1st – we have to pull the FHA case number by that date to be under the
Old rules. Otherwise – any FHA case # requested on or after Oct 4th, 2010 will go under the new rules.
The buyer must have a signed purchase agreement for us to apply for the FHA case #. The FHA case # can be gotten in 1 day.
Please keep this in mind for any clients you are currently working with.