Metropolis Loans Warns Homebuyers That Home Loan Costs May Increase Starting in April

“ Increased Borrowing Costs and Lost Concessions Could Cost Homebuyers Thousands of Dollars ”

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(iRealtyWire.Org) – PHOENIX – Metropolis Loans is warning homebuyers that March 31 is an important date to circle on the calendar. After that day, a number of changes could go into effect that could raise interest rates and lending costs for new homebuyers.

“It’s a very important to keep that date in mind if you want to focus on saving yourself a few dollars on your mortgage loan,” said Camerin Hawthorne with Metropolis Loans. “It may get more expensive to take out a new home loan after March 31.”

At the end of the month, the Federal Reserve has announced that they will discontinue open market purchases of mortgages in the Federal Reserve Mortgage Backed Securities Purchase Program.

According to the Federal Reserve, “[T]he Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter of 2010.”

The result could be slowing demand to purchase mortgage backed securities in the open market, creating increased interest rates to spur purchasing demand.

“The rates can definitely start creeping up after March 31 as the Federal Reserve stops purchasing the securities at low interest rates,” said Hawthorne. “Institutional investors will most likely request higher interest rates than the Federal Reserve to compensate for the continuing risk in the real estate market.”

Pundits are expecting rates to potentially increase 25 to 50 basis points. At 50 basis points, this could cost a homebuyer nearly $400 more per year on a $100,000 loan.

Additionally the Federal Housing Administration will be raising the upfront mortgage insurance premium (MIP) for the very popular low-down-payment FHA loans 50 basis points to 2.25 percent of the total loan value effective April 5. That would result in a $500 up front fee increase on a $100,000 loan.

FHA has also announced that it will cut seller concessions from 6 percent to 3 percent of the purchase price effective early summer and will also require a minimum FICO score of 580 to qualify for the 3.5 percent down payment program. Otherwise the required down payment will be 10 percent of the purchase price.

“The changes that will be going into effect April 1 and thereafter should encourage potential homebuyers to get prequalified for their Metropolis Loans loan and get the home search process underway today,” Hawthorne said. “It could save a homebuyer thousands of dollars in increased fees and lost concessions.”

Metropolis Loans offers a wide variety of home loans to meet every homebuyers need. For more information on the firm, or to request a no obligation quote for your new loan, please visit them on the web at http://www.metropolisloans.com or call 866-239-0098.

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Media Contact:
Camerin Hawthorne
Metropolis Loans
866-239-0098