If one borrows the maximum FHA loan amount of $729,750 and puts only 3.5% down on their purchase, their MIP will be HUGE under the new rules.
Up front MIP payment to escrow: $12,771
Monthly MIP payment (into oblivion, lol): $401.36
WHO would throw all this money (both up front and monthly) to the wind? Why not take the $12,771 and add it to the downpayment and try to buy FF with a 95% LTV mortgage? (PMI is surely the lesser of two evils.)
If you answer, “persons whose credit score is not high enough to qualify for FF,” then IMHO, those persons have no business purchasing a $750K+ property. Perhaps they need to save far more cash and bring up their scores before purchasing RE.
An FHA loan limit of $729,750 will quickly prove to be another gubment knee-jerk debacle which will most certainly self-detonate when these borrowers can no longer pay their HUGE mortgages with monthly MIP wrapped into the required impounds… ESPECIALLY if this new mtg limit will prevail everywhere in the country.
Good L@rd, what were the powers-that-be thinking here?? :=[
