So by now you all have heard that the Trump administration has stopped the planned decrease in the FHA MIP by .25%. While it would have been nice to have had a decrease in the cost of an FHA loan, it certainly isn’t the end of the world as some would have you think.
Articles and conversations on various social media platforms would have you think somebody eliminated FHA all together! Seriously, the number of loan officers throwing themselves into a fit is quite shocking. In fact, it’s pretty disturbing behavior for a financial professional.
This was a REDUCTION, not a new fee. FHA MIP premiums weren’t raised, they were left alone and not reduced until the new administration could look at the data and make sure this proposed fee reduction was something that could be done comfortably and without potential issues for the fund that insures these loans.
The crying over how people are no longer going to be able to afford to buy a home is absolutely ridiculous! On a $200,000 loan, you are talking less than $42 a month! If $42 a month is what keeps someone from buying a house, then maybe they should rethink their situation. Clearly rent on an apartment or equivalent home would be going UP more than that each year! And again, this fee isn’t going up, it’s staying the same!
Now as a business coach, my job is to help my clients deal with certain challenges. So, while none of them have had any issues with this situation, how about we talk about how to deal with this for those who may have an issue?
- You could always buy a house that is about $8,000 less expensive?
- You could spend a few thousand dollars in points to buy the rate down on the loan by .25%
- You could use money from your 401K to make a larger down payment.
- You could negotiate a seller’s concession toward closing costs to pay down the rate.
- You could look for assistance with the down payment or closing costs to make up the difference.
- You could work a part-time job for a couple of months and use that money to buy down the rate.
- You could look to other loan programs that may have lower fees or allow you to finance more money.
- You could wait and see if they lower the fee in the months to come, and hope interest rates don’t move higher.
- You could pray that interest rates go down.
All of these ideas and likely many more are all ways to deal with the fact that the FHA MIP was not reduced. However, the facts are, most people don’t use FHA loans to buy a home, and those that do are largely not now precluded from buying a home, or are even close to their maximum payment tolerance. For those that were; maybe they really need to rethink what they were going to do?
In any circumstance, it is your job as a financial expert to explain the situation, not inflame it! This really isn’t that big a deal, so don’t act like it is. Just explain the options and do the math! For those needing to use FHA to buy their homes, they are still getting a great deal. Don’t add to the drama by fueling the fire. Nobody is a victim here. Just be professional and share all the options!