According to the Department of Housing and Urban Development (HUD), starting October 1st the limits on FHA mortgage loans will go down nationwide. Hardest hit parts of the country (both coasts) could see loan limits go down by as much as $100,000 unless Congress takes action to extend the temporary increase passed as a stop-gap for propping up the housing market three years ago. If you’re considering refinancing with an FHA loan before October, you might want to check out this article from MortgageLoan.com.
About one-fifth of the nation’s counties are scheduled to see lower loan limits on FHA mortgages beginning Oct. 1, according to an analysis the U.S. Department of Housing and Urban Development (HUD). That’s when a temporary increase in FHA loan limits, enacted by Congress three years ago, is due to expire. About 670 of the nation’s more than 3,300 counties and county equivalents will be affected by the change, many of them in some of the nation’s most populated areas.
I’ve never cared much for FHA loans because they require you to pay for Private Mortgage Insurance (PMI), which does nothing for you as a homeowner, but only protects the lender from certain losses due to foreclosure. PMI is expensive and a waste of money; with mortgage rates near such historical lows an FHA mortgage could be viewed as a loan vehicle of last resort for many homeowners. (That’s what’s so great about VA loans if you’re a veteran…no PMI)
Which brings me to the subject of fees. If you’re going to be required to pay for mortgage insurance you sure don’t want to be paying junk fees also. Fees like the mortgage rate lock fee, loan processing fee, broker courier fee, and mortgage yield spread premium do little more than drive up your costs and boost profits for your loan originator and lender.
Because mortgage rates are so low now getting a good deal on your next home loan is more about the fees you pay and less about the interest rate. When you’re refinancing you have to recoup your expenses before getting any benefit from the lower payment amount. The more you pay at closing the longer it takes to get your money back… plain and simple.