Connecticut Financing Update and Today's Mortgage Rates 3/2/12

In a move to increase their financial standing (and get the FHA back into required capital requirements), on Monday, HUD announced their anticipated increases in the premiums they charge borrowers. Simply stated, the cost of borrowing is going up.

As an insurance company, HUD charges two types of premiums on the FHA mortgages:

• The UFMIP (Up Front Mortgage Insurance Premium) will be raised effective April 1, 2012 from its current 1% to 1.75%. One advantage to the UFMIP is the fact that it is typically built into the loan amount and does not require additional cash outlay at closing. However, the increase in loan amount does impact monthly payment and cash flow.
• The MMIP (Monthly Mortgage Insurance Premium) will be raised 10 basis points on April 1, 2012 to cover requirements of the payroll tax extension approved last year. This is a direct increase of 10 basis points in the borrower’s mortgage payment, and has the effect of a 10 basis point increase in interest rates. Loans over $625,000 will be bumped 35 basis points from today’s levels effective June 1, 2012.

This means on a loan amount of $300,000, we will see an increased payment of $36.41. We know that home buyers buy homes comparing what their monthly payment will be after they close. This hike in payment is equivalent to borrowing an extra $7,000. The result is that buyers are going to have to pay more or they will have to offer less to the seller to obtain the mortgage payment that they will feel comfortable with.

My advice is that sellers should price correctly and get into contract in March. Buyers need to get off of the fence and buy now. There is also a rumor that FHA will lower the allowable seller paid concessions from 6% to 3%.

Today's Mortgage Rates

30-year fixed-3.875% APR-3.924% 0 points

20 year fixed-3.750% APR-3.818% 0 points

15 year fixed-3.250% APR-3.333% 0 points

10 year fixed-2.875% APR-2.995% 0 points

5/1 ARM-2.500% APR-2.660% 0 points

7/1 ARM-2.750% APR-2.860% 0 points

FHA

30 year fixed-3.750% APR-4.659% 0 points

15 year fixed-2.875% APR-3.319% 0 points

Jumbo- over $576,000 (Fairfield County)

30 year fixed-4.500% APR 4.547% 0 points

15 year fixed-4.125% APR 4.218% 0 points

5/1 ARM-3.375% APR 3.419% 0 points

7/1 ARM-3.750% APR 3.818% 0 points

Pat Leary is  a mortgage banker with over 12 years experience as a lending specialist in Connecticut. Her passion is to guide her clients through the mortgage process. Pat takes pride on providing great customer service, through communication, trust and integrity, and strives to offer the best mortgage products and service in the industry. We're confident that you will receive the personal attention that you deserve. As a leading Mortgage Banker in Connecticut, Pat  is responsible for structuring your financing with the expertise to answer any questions you may have on rates, fees and products.

Pat Leary

NMLS #99279
Atlantic Home Loans
2751 Dixwell Avenue
Hamden,CT. 06518
203-645-1037 cell
203-691-9788 ext 226
1-203-413-5647 fax