FHA Mortgage Price Hike Hits Borrowers – Marina del Rey Real Estate
Marina del Rey Real Estate: FHA mortgage price hike hits borrowers
According to the chief economist of Zillow.com, a major real estate research organization, Stan Humphries, high levels of home affordability may soon become a thing of the past. He further said that current low home prices are influenced by factors like affordable interest rates which are expected to rise in the near future.
So, people looking for properties in premium places like Marina del Rey are likely to spend more than other real estate hotspots like San Diego.
Marina del Rey – A housing market synopsis
Due to rising mortgage costs, homebuyers in this part of the Los Angeles County will have to pay extra per square footage. Given the galloping home prices as compared to people’s income, equities on their properties may begin to move southwards, thereby preparing a housing bust-like scenario in the region.
The fact is that, homebuyers were made to pay 48.8% more for their properties in the last quarter of 2012 with respect to their median income. As a result, it has been found that Marina del Rey property owners paid more than San Diegans who paid a better price of just 44.6% for their homes.
The trend of dwindling home affordability can be attributed to the increase of annual mortgage insurance premiums on most of the loans backed by the Federal Housing Administration (FHA).
FHA annual mortgage insurance – Fresh hike of its premium
From 1st April 2013, the FHA has increased the cost or premium levied on the loans guaranteed by them. As per the fresh price hike, premiums on FHA mortgages have become greater than before by 0.10 percentage point or $100/year on loans starting from $100,000 value. Moreover, the FHA has hiked the loan costs that are more than $625,000 in value with a maturity period of 15 years by 0.05 percentage point. In other words, these loans will become costlier by $50 per year for every $100,000 loan amount.
However, all the price hikes are waived off in case of mortgage borrowers who refinanced their current FHA loans that was guaranteed by the federal body on or before 31st May, 2009.
Costlier FHA loans – Their implications on the local homebuyers
Price hike or not, FHA loan borrowers are liable to continue making the payments towards their annual mortgage insurance for an extended period of time. These price hikes will be applicable in case of fresh loans originating from 3rd June onwards. So, in the coming months FHA has decided to collect premiums on mortgages guaranteed by it for the life of the loan. This rule is applicable in case of borrowers with a loan-to-value ratio above 90%.
However, the FHA has decided to do away with the mortgage insurance for borrowers with a loan-to-value ratio below 78% of the principle loan amount after 11 years of regular monthly payments.
For borrowers who want to avoid these price rises on their loans and are looking to take advantage of the current low mortgage rates will have to apply for one well within the deadline of 24th May. Therefore, homebuyers can use all the above mortgage information to make better financial decision and plan their home purchase accordingly.
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