Weekly Mortgage Market Report - From Bob Joyce of Reliant Mortgage Company
Image by WSDOT via Flickr
The final week of the summer (heading into Labor Day weekend) looks to be another stellar one. This has been one of the best summer’s weather wise that I can remember in a very long time. Not only is the weather great but the mortgage rates are even better constantly setting new record lows. ARMS in the mid 3’s, 15 year fixed in high 3’s and 30 year fixed in mid to low 4’s. Although it is harder to refi due to tighter lending guidelines and appraisal issues, many still are able to refi and everyone should at least explore their options prior to rates pulling back.
Just a reminder FHA is possibly changing next month their upfront and monthly mortgage insurance. This may make qualifying for some a little more difficult but FHA still has the most lenient guidelines when it comes to credit score and debt to income ratios. Proposed changes are:
- Upfront MIP reduced by 100bps
- Annual MIP increased to 85-90bps on terms over 15 years.
How might this impact the affordability of FHA loans? With some quick math, net/net not that much. A lowered rate by 1/4% will overcome the difference (or about 4% more income):
Currently: $102,250 (UFMIP of 2.25%) @ 4.5% P&I = $518.09 + annual renewal @ .55% ($46.86) = monthly payment of $564.95.
New Guides: $101,250 (UFMIP 1.25%) @ 4.5% P&I = $513.02 + annual renewal @ 0.90% ($75.94) = monthly payment of $588.96.
At 40% back ratio, that requires $1,412 of monthly gross income versus $1,470 (about 4% more).
Any questions about these FHA changes or if my team and I can be of help in anyway – let me know. Have a great week!
Reliant Mortgage Company, LLC.