The Temporary Payroll Tax Cut, signed by President Obama, didn’t come without compromise. The tax cut is being covered by an increase in “G-fees” or guarantee fees of 10 basis points imposed on all Freddie, Fannie, and FHA loans.
What does this mean for the consumer? Plan on an increased rate of .125% and an increase of the annual mortgage insurance premium by 1/10th of 1% for FHA loans.
Doesn’t sound like much right? Let’s look at what happens to your monthly payment…
For a loan of $200,000 the increase of .125% would equal $250 more per year in interest or $7,500 over 30 years. An FHA loan would be increased by $4,200 over 30 years.
The rate can be bought down by the home buyer but most people looking to get an FHA don’t have the cash to do it.
The increase officially begins on April 1st, 20, most lenders have already changed their rate sheets to reflect the increase, and ends on October 1, 2021. Yes, it says 2021.
For more information on FHA loans or buying a home in Reno and Sparks feel free to contact me at (775) 750-1437 or Ricky@Resnv.com