The press release, HUD No. 12-037, states, “FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.50 percent for loans above that amount. Upfront premiums (UFMIP) will also increase by 0.75 percent.”
The increases are scheduled take effect in April 2013, so if you are in the market for a FHA insured loan it is advised to start the paperwork before March 24th so you can be sure you have a case number issued before the April 1st deadline.
FHA mortgage insurance premiums may be going up, but according to the press release, the changes are not severe, adding to about five dollars per month for most new FHA home loans where applicable or $100 per year for each $100,000 in loan amount.
The Bigger hit announced however is the fact that borrowers may be paying the mortgage insurance premiums for longer. Under the old rules a borrower could get rid of the PMI premiums after paying them for 5 years if the Loan dropped below 78 percent of the value of the home. But under new rules home owners who's loan is 90 percent or higher to the value of the home will have to make those PMI payments for the life of the loan.
As stated previously, the FHA Up Front Mortgage Insurance Premium is also affected; the current rate of one percent will increase to 1.75 percent of the base loan amount.
According to FHA.gov, “This increase applies regardless of the amortization term or LTV ratio. FHA will continue to permit financing of this charge into the mortgage. This change is effective for case numbers assigned on or after April 1, 2013,”
The press release also adds, “Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes announced today.”
For more information on the announced FHA mortgage insurance premium increases, visit the FHA official site.
iDeal Realty & Management
9051 W Kelton Lane, Suite 10
Peoria, Arizona 85382
(623) 201-3544
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