As of Today – FHA Mortgage Insurance Premiums Increase .25

How will this FHA change effect your Columbus Home Buying Experience?

How will this effect your Columbus Home Buying experience? Well, if you’re purchasing your home with an FHA loan, this higher MIP will take away, on average, approximately $5000 of buying power.

WASHINGTON – As part of ongoing efforts to strengthen the Federal Housing Administration’s (FHA) capital reserves, FHA Commissioner David H. Stevens today announced a new premium structure for FHA-insured mortgage loans increasing its annual mortgage insurance premium (MIP) by a quarter of a percentage point (.25) on all 30- and 15-year loans.  The upfront MIP will remain unchanged at 1.0 percent.  This premium change was detailed in President Obama’s fiscal year 2012 budget, also released today, and will impact new loans insured by FHA on or after April 18, 2011.

“After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market,” said Stevens.  “This quarter point increase in the annual MIP is a responsible step towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.”

The proposed change was announced last week as part of the Obama Administration’s report to Congress, which outlined the Administration’s plan to reform the nation’s housing finance system.  The Administration’s housing finance plan also recommended that Congress allow the present increase in FHA conforming loan limits to expire as scheduled on October 1, 2011.

This premium change enables FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) fund, which had capital reserves of approximately $3.6 billion at the end of FY 2010.  The change is estimated to contribute nearly $3 billion annually to the Fund, based on current volume projections.  It is vital that HUD take action to ensure that FHA will continue to serve its dual mission of providing affordable homeownership options to underserved American families and first-time homebuyers while helping to stabilize the housing market during these tough times.

On average, new FHA borrowers will pay approximately $30 more per month.  This marginal increase is affordable for almost all homebuyers who would qualify for a new loan.  Existing and HECM loans insured by FHA are not impacted by the pricing change.

FHA will continue to play an important role in the nation’s mortgage market in 2011.   President Obama’s FY 2012 budget projects the FHA will insure $218 billion in mortgage borrowing in 2012.  These guarantees will support new home purchases and re-financed mortgages that significantly reduce borrower payments.

New Numbers out today – Franklin County Real Estate Update

The Columbus Board of Realtors released official February numbers today…

2011 Central Ohio home sales off to a strong start

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(March 22, 2011) Home sales for the first two months of the year are just 1.1 percent behind the same period last year suggesting a strong start for the central Ohio housing market according to the Columbus Board of REALTORS® (CBR).

There were 2,178 homes closed in January and February compared to the 2,202 closings during the first two months of 2010.

February home sales dipped slightly to 1,128, just 1.3 percent less than the 1,143 homes sold during the same month one year ago.

“Why are we pleased at the small decrease in sales this year” asks Rick Benjamin, CBR President? “At this time last year, the first-time home buyer tax credits were significantly impacting our sales volume. To remain at nearly the same level without that incentive is a positive sign of a strengthening market.”

“Additionally, there were 1,812 residential homes put in contract in February which is 18.7 percent more than February of 2010 (1,527). This also bodes well for March closing activity.”

Franklin County saw 658 homes sell last month and 1,637 more listed for sale, while 137 homes sold and 302 homes were listed in Delaware County. The City of Columbus topped the charts with 423 sales and 1,023 new listings. Other cities which saw higher sales and listing activity include Dublin, Hilliard, Westerville, Gahanna and Pickerington.

School districts experiencing higher sales and listing volume in February included Columbus, South-Western, Olentangy, Hilliard, Westerville, and Dublin.

“Although, the actual numbers of sales and listings for these districts were higher, we’re fortunate to have many strong school districts in central Ohio, several of which showed larger activity gains when compared to last year,” adds Benjamin. “Every area is different so it pays to ask a REALTOR® to help you interpret the data.”