Don’t let the coming changes to FHA distract you from the opportunity of the $8,000 Federal Tax Credit.
HUD has announced an increase in the upfront MIP (Mortgage Insurance Premium) from 1.75% to 2.25%. This amount is added to the loan amount and financed into the monthly payment.
What does this increase in MIP really mean in dollars and cents?
Example: $100,000 base loan amount with a 30 year fixed 5% interest rate
Prior to April 5, 2010 the MIP added to the loan amount is $1,750 for a total loan amount of $101,750 with a monthly payment of $546.21.
After April 5, 2010, the MIP added to the loan amount is $2,250 for a total loan amount of $102,250 with a monthly payment of $548.90.
This is only a difference of $2.69 in the monthly payment!
The amount we should be focused on is $8,000 and the date we should be focused on is April 30, 2010. The First Time Homebuyer Tax Credit of up to $8,000 is available on properties that are under binding sales contract by April 30, 2010 and that close by June 30, 2010.
The HUD change to MIP is minimal. HUD has also proposed a reduction in seller contributions from 6% to 3%. This change is expected to pass and expected to come into effect mid summer. This change will only impact those sales where the seller was willing and able to pay up to 6% toward closing costs. Buyers will still be able to lender fund closing costs that are not covered by the 3% allowed seller contribution.
For now, I suggest we focus on the opportunity of a Federal Tax Credit of $8,000!
Tags: $8000 tax credit, atlanta mortgages, first time homebuyer tax credit, HUD changes, Judy Jones, Metro Brokers Financial, MIP increase, mortgage insurance premium increase
February 22, 2010 at 4:36 pm
Judy,
You are absolutely right. First time home buyers have an enormous opportunity to receive the $ 8,000 tax credit if they are under binding agreement by April 30th and close on their home by June 30th. This is what we should be focused on with our buyers and not the miniscule increase in Mortgage Insurance Premium.
February 23, 2010 at 1:16 pm
As we get closer and closer to the April 30th Tax Credit deadline date, I surprised by all the agents that started out like racehorses and are now like the dogs that sit on the front porch. I don’t hear the buzz or excitement about the tax credit, avaialble now for new and previous homeowners, in the office like I used to and I don’t see it being pushed out front through ads or flyers or other friendly ways to get the information out to the consumer where it does the most good. My eagles seemed to have forgotten how to soar and appear to be nesting. One night of watching the televised news programs is enough to confuse any potential homebuyer right now. One expert says it’s time to buy, one says real estate is dead and there are other experts whose advice falls in the middle. The person wanting to buy a home and listening to all this needs someone in the field everyday; someone who understands what’s happening and going on. Like it or not, the responsibility to inform falls upon the agents of Better Homes and Gardens Real Estate Metro Brokers. By default of all the training they receive and the techonology and broker and financial support they have on hand 24/7, they are the experts out in the field everyday. They have a responsibility to the public and themselves to make certain the correct information gets to those who need it and by doing so will help themselves in the process. The agents need to help the public place their focus on the proper numbers- numbers that will work for them! People come back to do business with people who are knowledgeable and know what to do with that knowledge.
February 23, 2010 at 9:28 pm
Be sure to remind potential customers that after closing on their home, they can amend their 2009 tax returns and get the $8,000 tax credit now as opposed to having to wait and file in 2011.
February 24, 2010 at 10:01 am
Judy, you make an excellent point. Boy is this the epitome of not seeing the forest for the trees!
I’ve been on a “eat good food” regimen lately and may be a little out of date on the prices of fast food, but what you’re saying is that this FHA change is going to cost first time buyers (and move-up buyers, too, for that matter) the equivalent of a slice of pizza a month. Not the whole pizza, just one slice. Hmmmmmmmmmm, let’s see…….one slice of pizza or $8,000? Tough decision!
March 2, 2010 at 8:52 am
Judy
Always great to know that with the complexities of mortgage lending in todays market, Metro Brokers Financial has the BEST Management and Staff watching the market, studying the rules and informing those of us who do not have the time to do that ourselves. Without someone like you, who we know and trust, selling a home would be much more complex than it is.
March 3, 2010 at 11:33 am
Great point Judy.
March 30, 2010 at 7:29 am
LOL, I loved the way that this was broken down, and one of my new buyers did to. Did I mention they were not always my clients at the start. I cut and past it into an email to my warm leads just telling them to change their mind set and concentrate on what important. It sounded like it came from me….LOL Focus on $2.69 vs $8,000 really open their eyes and made them move to a call that I should have recieve 3 months ago… in their words “your email opened my eyes to what’s important, I dont know what I was waiting for.” This is full of good stuff, I learned to “steal” shamlessly and show my clients how much I know about the business.. LOL
March 30, 2010 at 1:13 pm
There is a lot of information that comes across negative if it is not examined and explained to the client correctly.
Thanks Judy for this simplistic explanation about the changes with MIP!
I agree-the focus should be on the $8,000 tax credit.