Posted by Gregory/CA on 3/22/13 11:49pm
Msg #462633
FYI: FHA Mortgage Changes Coming April 1st, 2013
I searched 'FHA Mortgage Change' to see if someone posted this already, but the search came up empty. Not sure if anyone else has seen this upcoming change. It was brought to my attention this evening. Quite interesting.
Here is the link (http://tinyurl.com/bucdsct) or you can read below.
*****************************************************
PR Web
Scottsdale, AZ (PRWEB) March 07, 2013
Beginning April 1, 2013, FHA (Federal Housing Administration) will change their MIP (mortgage insurance premiums) on loans. How this will affect you? If you plan purchasing a home using FHA as opposed to a conventional loan it will cost you more money.
By law, FHA is required to maintain a 2% reserve on its Mutual Mortgage Insurance fund (MMI). Because of the bad loans given in the early 2000's, FHA had a drop in its MMI to 1.44%. In an effort to rebuild to it's original 2%, FHA has made the move to increase its annual mortgage insurance premiums on most FHA backed mortgage loans. This equals out to you (the borrower) as an increase of 10 points annually, or 0.10 percentage points. The increase applies to all loan terms under FHA, including 15 and 30 year fixed rate mortgages, which are the two most popular.
The FHA also announced that it is reversing its policy which allows FHA-backed homeowners to cancel mortgage insurance premiums once the outstanding principal balance of an FHA loan reaches 78% of the original balance. Starting 4/1/13, you may no longer remove the MIP throughout the life of the loan if the beginning loan balance is higher than 90% of its appraised value. This will remain true for purchases and refinances that fall in this category. If the loan balance is 90% or lower of its appraised value then the MIP must be paid for 11 years (this change takes effect June 3, 2013).
FHA mortgages typically cater to first time buyers who only have the minimum of 3.5% to put down or buyers with less than stellar credit. In an effort to minimize their exposure to these sometimes riskier loans, FHA has decided to increase their premiums by .1% on most loans they insure. For the average priced home of $250,000, this is about a $20 increase per month.
People looking to buy a home with FHA financing should do so before the April 1st change. As long as a property address people will not be affected.. There is a small window left for borrowers with less than 20% down to capture the current FHA rules!
|
Reply by Bear900/CA on 3/23/13 12:29am
Msg #462635
HUD's new policy removes the exemption from annual MIP that previously applied to any loan with a term of < 15 years or LTV < 78% at origination.
The only FHA loans not subject to this annual MIP increase are FHA streamline refinances to existing FHA loans endorsed on or before May 31, 2009.
Down payment minimums are still at 3.5%, or 96.5% LTV. MIP will no longer drop off at 78% as they used to. Homeowners will be paying MIP for the full 30 years.
Interestingly, you can now get a conventional loan with just 3% down with lender paid MIP and a 720 FICO, or 5% down with lender paid MIP and a 680 FICO. Since it is conventional, MIP drops off at 80% LTV srtill.
FHA is still good for low FICO customers, but its no longer the best option for those with minimum down payments and better scores.
The swing is already being made back to conventional with a lot of brokers and wholesale lenders.
Adios FHA!
|
