Beware of FHA Changes

By
Mortgage and Lending with Gateway Bank Mortgage, Inc

FHA Announced that they will be changing their Mortgage Insurance Premiums AGAIN, effective April 18, 2011. 

FHA does not underwrite mortgages - they insure them against default, just like Private Mortgage Insurance Companies.  Because of this, they determine their own guidelines for underwriting the file, and they set their own rates.

There are currently two types of Mortgage Insurance or PMI associated with every FHA loan we make.

Up Front Mortgage Insurance Premium (sometimes referred to as UFMIP):  The current rate on this premium is currently 1 percent of the loan amount.  At THIS TIME, if you sell the property or refinance it – you will NOT get a refund of the fee as you did in year’s past.  Up Front MIP is not changing.

Annual (or Monthly) Mortgage Insurance Paid for monthly but it's calculated "annually" so it's most often referred to as "Annual"  The new rate for this FHA Mortgage Insurance Premium varies depending upon a) your downpayment; and b) the length of your loan term.

Annual Premiums for Loans Longer than 15 Years


If you borrow 95% of the value of the home or Less                               1.10%
If you borrow MORE than 95% of the value of the home                        1.15%

Annual Premiums for Loans 15 Years or Less

If you borrow 95% of the value of the home or Less                                  .25%

If you borrow MORE than 95 percent of the value of the home                .50%

What does this mean to you?  See the example chart below.  If you are applying for an FHA loan and you've already been pre-approved using FHA, you will want to ensure this change does not disqualify you for loan approval you were seeking OR affect your personal monthly budget.  If you have a contract already, you will want to ensure your lender has already secured your FHA Case # not later than today.

AnnualFHAMIP_examplechart

*Chart above is from HUD's Mortgagee letter.

For more information I've provided a link to HUD's Mortgagee Letter HERE detailing the changes ahead.  Thanks for reading and contact me with any questions you may have or for RE-pre-approval.

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Rainmaker
164,758
Cynthia Grimes
ReMax Advantage Realty - Westminster, MD
Associate Broker

Do you feel like we have gone from one extreme to the other with the lending guidelines?  A happy medium would be good for safe lending but more available lending.

Apr 17, 2011 09:54 AM #1
Rainer
194,869
Adam R. Cohn
Primary Residential Mortgage, Inc. - Boca Raton, FL
We actually get mortgages closed FAST!

The government is the predatory lender with squeezing borrowers with increases in the MI.

Have a good day.

Adam

Apr 17, 2011 09:59 AM #2
Rainmaker
128,392
Steve Combs
Gateway Bank Mortgage, Inc - California, MD
NMLS: 381933

To an extent Cynthia since really the only folks getting loans today are proving who they are, what they've got, how they got it, what they've done and what they make; oh, and it's acceptable under stricter criteria.  However, FHA is still an attractive and highly used tool to obtain homeownership for many buyers in today's market.  A silver lining TODAY is that every home is on red-tag sale with many seller's 'expecting' to pay some closing costs and mortgage interest rates are below normal levels.  The concern is not really TODAY but tomorrow when rates normalize, the "buyer's market" isn't as pronounced and inventories level off.  Right now, the affordability index is very attractive but with the expected changes in the near future, this can/will affect qualification.  HUD reportedly needed to do it to ensure survival; as did USDA with the Rural Development loan last year.

Apr 17, 2011 11:15 AM #3
Anonymous
Anonymous
Bonnie

Thanks for the update.  It is difficult for some of us realtors to keep up on all the lending information out there.

Apr 17, 2011 02:38 PM #4
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Rainmaker
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Steve Combs

NMLS: 381933
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