April 1 isn’t just April Fool’s Day. It’s also when mortgage insurance premiums on loans from the Federal Housing Administration (FHA) are set to increase by up to 0.10 percent. That means buyers on the verge of applying for a loan should do so before April 1 to obtain a case number.
And if they don’t?
In certain cases, a conventional loan may actually begin to make more sense.
FHA loans are ideal for first-time buyers who prefer a smaller down payment and lower mortgage rate. However, the advantages an FHA has over a conventional loan, which usually comes with a higher down payment and mortgage rate, can be lost when the mortgage insurance premiums are factored.
This is just another reason for buyers to feel a sense of urgency. As reported by the New York Times earlier this month, buyers all of the sudden find themselves in a tricky predicament:
In markets where housing inventory is tight, said Mr. Lawrence Yun, the chief economist of the National Association of Realtors, buyers will have to make a trade-off: act right away to get the best financial deal, or wait for more choices and perhaps pay a bit more.
According to data gathered by Zillow, residential prices are rising at double-digit rates in sections of California, and the Phoenix and Las Vegas areas. As of January, the median sale price was up 14 percent over the previous year, to $448,500, in the San Francisco Bay area, and 23 percent, to $169,200, in the Phoenix market. “The markets that are more Midwest and Northeast are seeing much lower growth rates,” Mr. Humphries said. “That’s partly because the buyer profile in the Sunbelt markets looks considerably different, with a lot of retirees, second-home buyers, and international buyers.”
In much of New York, New Jersey and Connecticut, buyers need not be so concerned about beating price appreciation. All three still have a backlog of foreclosures yet to make their way through the courts. A “looming shadow inventory” could keep prices fairly flat this year, with Manhattan the exception, Mr. Yun said.
Bottom line: Buyers should be patient — if they can afford it.