San Diego Real Estate Professionals at eXp Realty

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…This is NOT an April Fool’s joke!

FHA Loan Fees San Diego Houses CondosIf you’ve been considering buying a home in San Diego, there is a good reason to act soon. The ever-popular FHA home loans which are available for houses and condos in San Diego will soon carry higher fees.  FHA loans are popular because they allow buyers to purchase homes with as little as 3.5% down payment on loan amounts up to $697,500 in San Diego County.  Avoid the higher fees by getting into a contract BEFORE April 18, 2011.

Why the higher fees?  The Federal Housing Administration (FHA) is increasing the annual mortgage insurance premiums (paid monthly) on FHA home loans. The new rates will apply to any new FHA home loans originated after April 17, 2011. In other words, FHA home loans will become more expensive starting on Monday, April 18, 2011. But, practically speaking, since very few mortgage lenders are available to open new FHA loan case assignments on the weekends, you need to be in escrow on your home purchase by April 15, 2011.

How much will you save by buying your San Diego house or condo by April 15?

On a $200k loan amount: $41.66 per mo savings
On a $300k loan amount: $62.50 per mo savings
On a $400k loan amount: $83.33 per mo savings
On a $500k loan amount: $104.17 per mo savings

That means a $400,000 home loan will cost an additional $1,000.00 per year for the life of the loan. That’s $30,000 over 30 years!

So if you’ve been on the fence about buying, now would be the time to act. Contact the San Diego Real Estate Pro’s at 1-800-955-6463 for immediate service. We’ll help you find the perfect house or condo and help you negotiate a great price.

Remember, you must find a home, write the offer, and have the offer accepted by April 15, 2011 to avoid substantial increases on the FHA loan payments.

17 Responses

  1. I love FHA! I don’t care what the increased MIP premium is going to be – this is low-downpayment, good interest rate, and make-sense-qualifying home financing.

    A few years ago, you could not touch Bay Area Real Estate with FHA financing. Even the lower prices of Concord CA homes for sale or Martinez CA real estate were still too high priced for FHA loan limits at the time.

    Today – with the increased loan limits – Walnut Creek California homes, which have not been viable options for FHA financing for fifteen years, are likely candidates.

    I even saw some chi-chi Lafayette CA real estate sell recently with FHA financing!

    I’m sorry about the increased costs, but it is still a great way for a young family to get into a great house in a terrific area!

    1. You’re right Bob. FHA loans are great, and they’ve been giving a lot of home owners hope.
      Note that all FHA loans are going to come to a screeching halt if Congress does not pass a new budget. The parties are currently just $8 Billion apart on the new budget bill. That amount is just is a drop in the bucket compared to the overall federal budget… less than 1% of the total. And without a budget, NO FHA LOANS!!!!
      So if you haven’t already done so, WRITE YOUR CONGRESSIONAL REPRESENTATIVES to let them know they NEED to get their acts together and come to an agreement on the budget. It’s ridiculous to think that party politics could do such HUGE damage to the economy for such a trivial sum of money.

  2. The slight increase in fees is still a small price to pay for getting what is otherwise a pretty attractive loan product. So, I don’t think it’s going to make a big difference in effecting the number people who will continue to do FHA financing.

  3. Good points by bob and Geoff. Today is the 15th and hope some people closed in their deals. I would say still FHA is the most feasible option for all its got a little expensive but still its the common man’s catch

  4. Got it for sure. The slight increase in fees is still a small price to pay for getting what is otherwise a pretty attractive loan product. This is one of the best real estate financing options in southern California and the country.

  5. I cannot believe you can STILL go up to nearly $700,000 on a FHA loan in Cali! I know it is expensive there but that is unreal. Buy with $25k down and start missing payments right away. It would probably take two years to get you out.

    1. And you believe right. As of September 30, 2011 In San Diego County the FHA loan limit has dropped from $697,500 to $546,250. This means that buyers in the mid-to-upper range of San Diego real estate prices are now going to have to put down 20% on their next homes. But not to worry, the rates for jumbo mortgages have dropped to historic lows, and the banks are willing to lend!

  6. In my experience, folks looking in the upper price range that require jumbo financing have the 20% to put down. $546k is still nothing to shake a stick at for FHA financing.

  7. I think with the recent reduction in conventional financing loan limits and reinstatement of the higher FHA loan limit, FHA financing will fill a much needed gap for the higher priced markets.

    I think if a buyer has a 720+ higher FICO score and has at least 5% down payment, conventional with PMI may be the best way to go with the multiple PMI options available to them. if credit scores are lower (below 660 or 680), FHA rules the day.

  8. Yes, the FHA insures mortgages. And the FHA underwriters make the loans which are originated through various investors (banks). That’s why the term of art is FHA Loans. But you make an interesting point. If you care to elaborate, your comments are welcome.

  9. The Federal Housing Administration (FHA) just announced on Monday February 27th, 2012 that they will be increasing the annual mortgage insurance premium on new San Diego FHA loans for all purchase and refinance transactions.

    1. That’s right. Both the origination fee and the mortgage payment itself is increasing. Buyers need to be in contract by April 30 as I recall, and then close within 30 days. So time is running out before FHA Loans will cost more again!

    1. That’s right Edward. The logic is that people who buy homes with less than the conventional 20 percent down payment are more likely to default on their home loans. So the insurance is supposed to mitigate that risk. Do you know the percentage of buyers in Florida who are buying homes with FHA loans right now. It’s about 40% here in San Diego.

  10. If you get an FHA-insured mortgage and then default on it, the FHA reimburses the lender for financial losses. As the borrower, you pay for the insurance, even though the lender is the beneficiary.

    1. You’re right, the borrowers do pay insurance on FHA loans with down payments less than 20%. The extra mortgage insurance increases the payments, but also makes it possible for people to buy homes who otherwise wouldn’t have the down payment saved up to do it. What percentage of home loans are FHA loans in Florida right now?

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