Just in time for spring, deadlines loom
Regular readers will recall that the United States Department of Agriculture's Rural Development program was set to expire last Fall, in Post Falls and 900 other communities in the nation, due to population estimates from the 2010 census. Intense lobbying by the National Association of Realtors and other groups caused the government to acquiesce and maintain the program - through March.
We are all becoming familiar with the lack of action in Washington. Action seems to occur at the eleventh hour, if at all. Although we continue to press for a more permanent extension of this program, no action due date assures funds will be available to Post Falls, due to their increase in population density. The Rural Development program accounted for over $60 million in real estate loans for Post Falls in the last couple of years so the impact of its loss could mean a slow down in a moderately recovering market. For now at least, the market in Post Falls, particularly in new construction, is brisk.
The loss of the rural designation for Post Falls may be a blessing in disguise. Communities like Athol, Rathdrum, Twin Lakes, Hauser, Spirit Lake and the Silver Valley could all benefit as folks who qualify for these loans are pushed further away to find properties suited for the rural designation. This may be the stimulus these areas need to join in the local recovery. As Coeur d'Alene, Post Falls, Hayden and Dalton have regained some lost ground in pricing, those rural areas continue to lag behind.
If you are one of many who qualifies for a USDA loan and you want to live in Post Falls, you will be well served to find your property now, because unless Congress acts to extend the program, March 27 will be its end.
Of course not everyone needs a USDA loan nor do they necessarily want to live in Post Falls. Many of our area sales are funded through loans insured by the Federal Housing Administration. Like USDA, these loans offer some flexibility in credit scores and allow for a minimum down payment of only 3.5 percent of the purchase price. Loans above 78 percent of the purchase price typically are subject to an additional Mortgage Insurance Premium. Once the loan principle is paid down below that 78 percent the homeowner can petition to have that MIP removed, thereby lowering their monthly payment.
Not so after April 1. The FHA Mortgage insurance premiums have been increased five times in the past four years. In April 2012, the upfront premium was increased to 1.75 percent. Beginning on April 1, 2013, the annual premium for new mortgages less than or equal to $625,500 and Loan To Values greater than 95 percent will be 1.35 percent. The annual premium for new mortgages greater than $625,500 with LTVs greater than 95 percent will be 1.55 percent. FHA also removed the automatic cancellation of the annual MIP for fixed-rate mortgages with LTVs greater than 90 percent at origination. These borrowers will have to pay the annual MIP for the life of the loan beginning June 3, 2013.
So, in realistic terms, if you buy a $150,000 home using an FHA loan, your MIP would ad $125 to your monthly payment if you have a 3.5 percent down loan. Once these new rules take effect you can look forward to that higher payment for the life of the loan.
The good news is that interest rates remain low, so buying a home remains affordable for many. Adding MIP for an extended period may cause many to reevaluate their wishes to own and may offer some merit to renting.
Trust an expert....call a Realtor. Call your REALTOR or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a REALTOR member who will represent your best interests.
Kim Cooper is a real estate Broker and the spokesman for the Coeur d'Alene Association of REALTORS. Kim and the Association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of REALTORS, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling 208-667-0664