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2013-04-15 11:06:15
The $55,000 Home Buying Decision

We have clients that had decided to hold off on purchasing a home here in Eugene till Fall time, but then decided they should buy now.

 Here is what motivated them & changed their mind from delaying their purchase:

They are qualified for an FHA loan.  Come June 1st FHA is changing the rules with their Mortgage Insurance.  Right now, buyers with FHA loans can eliminate their FHA Mortgage insurance once they have 22% equity in their home (or another way to understand this is 78% loan-to-value).  Most buyers will acheive this equity sometime between years 5 - 10 of purchasing their home.  

Our clients were qualified for a home loan that was just over $200,000.  And currently FHA Mortgage Insurance is at 1.35%..  Which makes the monthly mortgage insurance right at $232 in their situation.

So we took the conservative approach & calculated that they would have enough equity in their home in 10 years. This assumes 2.2% appreciation every year and means if they get an FHA loan before FHA changes the mortgage insurance program, they can save 20 years or mortgage insurance payment (with a 30 year loan) at $232 per month.  $232 * 20years = $55,707.

In order to avoid this additional long-term cost, buyers need to be in contract and have an FHA case number prior to June 2013.   For more information about this & how it may save you money, contact us at 541-554-7918.




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