If you are a first-time buyer or a buyer planning to use FHA financing with a 3.5% down payment in 2013, you should be aware of the new changes. Effective April 1, 2013, the MIP ( mortgage insurance premium) charge for newly approved loans has increased. For a $250,000 loan, the monthly loan payment will increase by approximately $20 per month. This may not initially sound like a lot of money but over time (30 years) it adds up! Consult your mortgage loan officer to understand how it will affect you.

More importantly, effective June 1, 2013, the MIP charge will carry through the life of the loan! FHA currently allows the borrow to remove the MIP up charge after the loan amount has been paid down by 15 – 20%. You would simply make the request to your lender to have the charge removed, and upon verification, your loan amount would be adjusted to a lesser amount. This will no longer hold true after June 3, 2013.

The bottom line – Try to have a ratified contractor or lender case number issued by June 3, 2013, to save money that you can be used for home improvements instead of lending fees.