Are you an FHA borrower? If so, you need to be aware that HUD recently announced changed to their mortgage insurance premiums (both up front and monthly) that will go into effect for case numbers pulled on or after October 4, 2010. A case number can be pulled once an earnest money agreement has been negotiated.
The bottom line is that the up front premium will go from 2.25% down to 1%. However, the monthly premium will go from .55% to .85% -- resulting in higher monthly payments.
For example: Say you buy a home with a $350,000 purchase price, 3.5% down payment
Today the up front premium would be $7,599
- October 4th, it would be $3,377
Today the monthly MI would be $158
- October 4th, it would be $242
I work with Ginny Schider at The Real Estate Loan Company (firstname.lastname@example.org) and she recommends consulting with her if you think your only lower down payment option is FHA. For example, if you are able to put down 5% rather than 3.5%, you might be a candidate for private mortgage insurance, which could lower your monthly payment significantly.