FHA Mortgage Insurance Increases coming April 1 (aka MIP)
HUD announced this week that they will be increasing the MIP rates (aka Mortgage Insurance Premiums) by up to another .10% beginning on April 1 to 1.35% per year for most FHA Loans. HUD is the US Agency that runs the Federal Housing Administration (FHA), and HUD sets policies for FHA Loans. They have steadily increased the MIP rates over the past several years in an attempt to bolster their Reserves - so they can handle the foreclosure claims from failed loans.
Another key element is the new requirement that the Mortgage Insurance Premium will paid for the entire life of the loan. Currently the MIP can be removed after a minimum of 60 payments and the Loan to Value reaching 78% for most FHA Loans. But this now becomes a permanent feature of your Monthly FHA Loan Payment.
So the real question is: What does this mean to the FHA homebuyer or FHA Home Refinancer?
- Since the rates are going up, you should consider refinancing now. Get started well prior to April 1 to ensure that we can lock in the lower MIP rates and cancellable MIP for your loan.
- If you are looking to purchase a home with a FHA Loan, be timely to ensure we have enough time to lock in your lower MIP rates (you would have to be in contract on a specific property to do this).
- Consider Conventional financing options - VanDyk Mortgage offer Conventional loans up to 97% (3% down), 95% loans for purchase and refinance, and 95% loans with no monthly PMI. And each of these options offers lower PMI rates when compared to FHA MIP rates
A few quick definitions:
PMI = Private Mortgage Insurance (used on Conventional loans)
MIP = Mortgage Insurance Premium (for FHA Loans)
UFMIP = Upfront Mortgage Insurance Premium (for FHA Loans)
Give us a call or apply online to get started. We can help you find the best option for you.