How The New Fha Mortgage Changes Affect You

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

FHA decided to make these changes due to the nature of the current 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 owners?

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

Home Owners with high debt-to-income ratios will need to consider paying off some debts before buying 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 great for first time home buyers and people looking for mortgages with low down payment options.

FHA mortgages also offer people lower rates and 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 important when purchasing a new house that you talk to a loan consultant to discuss all your mortgage options and see which home loan program best meets your needs. Since there are many types of home loans, it is important to get all the information you can so you can make an educated decision.

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

Article Originally Published On: http://www.articlesnatch.com

Tags: Real Estate Lending

, FHA

, Mortgages

, Home Loans

, Business and Finance

, Real Estate

, Loans

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