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What will happen to interest rates if the bailout passes through? Will they stabilize? Go down? Go up?
I'm in the middle of buying a house and trying to decide when to lock in. I'm at 6.375% for my FHA loan and I'm debating if I should wait till after the bailout passes to see if I can get the rate lower.
I just went through this process. Lock it in asap. There is a very high chance that they will go up. Pay $500 and do a floating lock. This way u will have one chance to re-lock.
Interest rates will probably go up, but at the very least lending standards will get tighter. They are thinking about allowing crump downs in Bankruptcy court (Basically the judge can reduce your mortgage to an amount you can afford). This will badly punish lenders who originate loans that aren't affordable, as a result lenders will go back to very conversative notions of affordability.
if you dont close that FHA before the 1st it will be going up and costing more and require more down.
Not always. The upfront and monthly mortgage insurance on FHA loans is going back to a "flat fee" for everyone, but that doesn't mean it is going to go up for all.
The monthly insurance is now .5 - .55%, after October 1st it will be back to .5% for everyone. So no change or a whopping .05% savings (which is pennies).
The upfront MI fee is now a range from 1.25 - 2.25%. After October 1st it will be back to 1.5%. For some it does mean a .25% increase in the fee, but if you had lower credit you might benefit from waiting until after the change. You could actually end up with a lower upfront charge.
The downpayment increase doesn't go into effect until January 1st 2009, so no worries there.
Last edited by rcarrillo; 09-25-2008 at 10:44 AM..
So the consensus is to lock my rate in? I think it might be smart. It would suck if the rates went down, but it would suck more to have to pay .25% more interest as well.
Location: central, between Pepe's Tacos and Roberto's
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Quote:
Originally Posted by rcarrillo
Not always. The upfront and monthly mortgage insurance on FHA loans is going back to a "flat fee" for everyone, but that doesn't mean it is going to go up for all.
The monthly insurance is now .5 - .55%, after October 1st it will be back to .5% for everyone. So no change or a whopping .05% savings (which is pennies).
The upfront MI fee is now a range from 1.25 - 2.25%. After October 1st it will be back to 1.5%. For some it does mean a .25% increase in the fee, but if you had lower credit you might benefit from waiting until after the change. You could actually end up with a lower upfront charge.
The downpayment increase doesn't go into effect until January 1st 2009, so no worries there.
Check into HUD mortgagee letter 08-22. Purchase money and full credit qualifying refinance transactions are subject to an UFMIP of 1.75% effective on new FHA case numbers after October 1, 2008. Streamline refi's will have an UFMIP of 1.5%, and FHASecure will have a UFMIP of 3%. Also, the MMI on loan to values over 95% on loans greater than 15 years will be 0.55%, below 95% loan to value on loans greater than 15 years will be 0.5%.
the closer your closing, the more inclined to lock......but.....no one has the crystal ball.
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