What's Up With Mortgage Insurance/Changes Beginning 10/1/11?

We’ve been asked several times today: “What impact will the Fed’s action yesterday have on mortgage interest rates?”  Here’s their plan:

Sell short term treasuries and reinvest those funds in long term treasuries.  This is intended to push long term rates even lower (because of course 4% isn’t low enough!)

Reinvesting funds from maturing Mortgage Backed Securities (MBS) in new MBS.  Again, this is indented to keep mortgage rates at low levels.

** So, the impact on this effort should equate to continued low long-term mortgage rates.

 Loan Changes coming affective October 1, 2011

 VA- They have lowered their upfront Funding Fee from 2.15% of the loan amount to 1.4% of the loan amount for loans closing after 10/01/11. 

This is a great benefit to our Veterans and is nice to see.  This funding fee is added to the loan amount (financed) and this change doesn’t affect their payments a great deal but their loan balance will be less.

FHA – Loan limits change depending on County.  King, Pierce and Snohomish county will remain at $417,000.  The new “high balance” FHA will be $506,000.

Conventional – Loan limits change depending on County.  King, Pierce and Snohomish county will remain at $417,000.  The new “high balance” Conventional will be $506,000. 

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