Impending changes by the FHA (Federal Housing Authority) and HUD (Housing and Urban Development) could cost you thousands extra if you wait rather than taking the plunge and buy now.
These changes which are due to take effect between the March 31st expiration of the Federal Reserve Board’s mortgage backed securities purchase program (this is one of the main reasons that loan rates have been kept artificially low) and the April 30th Home Buyer Tax Credit deadline, could hit you where it hurts, in your pocket.
The first of these changes impacts the cost of up-front mortgage insurance for FHA guaranteed loans. The current rate of 1.75%, is set to increase to 2.25%. This would mean that a borrower would pay an extra $965 on a $200,000 loan, assuming a down payment of $7,000. The mortgage insurance is usually added to the end loan amount, so the additional cost will be added to your monthly loan payment.
The other change will reduce the amount of seller concessions that can be returned to the buyer from the seller, from 6% to 3% of the purchase price. Seller concessions are generally used by buyers to pay their closing costs, a reduction in the amount that can be claimed, may mean that you the buyer will have to bring more of your own money to the table.