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Changes to FHA Mortgage Insurance effective October 4th

On September 2, 2010, in FHA Mortgages, by Todd Abelson | View Comments

As a result of new Public Law 111-229, FHA was given authority to change the amount charged to borrowers for both the Up-Front and the Annual Mortgage Insurance premiums. These changes as outlined in Mortgagee Letter 2010-28, are effective for all case numbers assigned on or after October 4th, 2010.

Here are the 6 things you need to know about these changes:

1. The Up Front premium is now 1.0 % for all standard FHA programs

2. The Annual premium is now .90% for LTVs GREATER than 95% on 30 year loans

3. The Annual premium is now .85% for LTVs EQUAL to or LESS than 95% on 30 year loans

4. The Annual premium is now .25% for LTVs GREATER than 90% on 15 year loans

5. The Annual premium is now .00% for LTVs EQUAL to or LESS than 90% on 15 year loans

6. These premiums apply to purchases, regular refinances and streamlines

Please note that this new law also gives FHA the authority to raise the Annual premium at will up to 1.5% for LTVs at or below 95% and 1.55% for LTVs more than 95%.

The result will be HIGHER monthly mortgage payments on new loans, although Borrowers will maintain a bit more equity. Just what we needed, right? HIGHER mortgage payments!!!

The question I ask myself now is – “why doesn’t every homeowner with an FHA loan that paid Up-Front Mortgage Insurance of 2.25% consider REFINANCING not only a lower rate, but to receive a full refund of the unused Up-Front MIP they paid?” Didn’t anyone in Washington think of the Negative effect this will have on the FHA coffers???

Call Todd Abelson & Tyler Ford at Sunstreet Mortgage in Tucson, AZ at (520) 331-LEND for all your mortgage needs!

Higher (And Lower) FHA Mortgage Insurance Premiums Start October 4, 2010

On August 13, 2010, in Mortgage Programs & News, by admin | View Comments

FHA mortgage insurance premiums ready to changeFor the second time this year, the FHA is modifying mortgage insurance.

Beginning with FHA case numbers issued on or after October 4, 2010, the FHA is changing its upfront and annual mortgage insurance premium structure.

Under the new terms, assuming a 30-year fixed rate FHA mortgage with at least 5 percent equity:

  • Upfront MIP drops to 1.000% of the amount borrowed from 2.250%
  • Annual MIP increases to 0.850% of the amount borrowed from 0.500%

For homeowners in Tucson and everywhere else , this switch in MIP decreases the upfront cost of an FHA-insured mortgage, but increases the loan’s long-term costs.

Using a $100,000 mortgage as an example, upfront MIP falls to $1,000 from $2,250; monthly MIP jumps to $70.83 from $41.67. The FHA expects the change will yield an additional $300 million in premiums monthly.

The update is a huge win for the FHA whose reserve funds are self-proclaimed to be “perilously low”.  The extra monies should help recapitalize and stabilize the government group.

The FHA is on pace to back 1.7 million loans this year.

For the majority of refinancing FHA homeowners and home buyers, the MIP change is neither good nor bad — the borrowing landscape will just looks a bit different.  Yes, loans will cost more to carry each month, but also they’ll be less expensive to procure. It’s a trade-off and you can apply math formulas to solve for the best time to apply FHA.

It may be wise to get your FHA case number before October 4, for example, depending on your time frame in the home and the expected life of the mortgage. Or, it may be better to wait until after October 4 to apply.

If you’re unsure of how the new FHA mortgage premiums will impact your mortgage, be sure to call or email your loan officer for help.

NOTE : The FHA originally announced an implementation date of September 7. It was subsequently amended to October 4, 2010.

FHA Mortgage Insurance to change FOR THE WORSE?

On August 6, 2010, in FHA Mortgages, by Todd Abelson | View Comments

In an unbelievably native attempt to prop up the FHA Mutual Mortgage Insurance Fund, effective September 7, 2010 the Up Front Mortgage Insurance Premium (UFMIP) is decreasing from 2.25% to 1.00% and the Monthly Mortgage Insurance Premium is increasing from .50%-.55% to .85%-.90%.

Click here to read the full “Special Addition” letter

Now I can’t begin to see things from there side, but here’s how I see it – the monthly cost of owning a home will increase;  here’s a typical example: Assuming a $125,000 purchase price using a 30-year fixed rate FHA loan at 4.50% under the CURRENT terms (3 1/2% down, 2.25% UFMIP, .55% MMI) the Principle, Interest and MMI portion of the payment will be $680.23. Under the NEW terms (1.0% UFMIP, .90% MMI) the same home will cost $707.77 – $27.54 per month MORE (an increase of 4% in payment).

While this may not be alot to most people, it may be the difference between loan approval and denial. Besides what does this do to help people BUY homes and “mop up” the excessive inventory? PLUS if less people can afford to purchase a home doesn’t that mean LESS moneywill go to into the FHA Mortgage Insurance Fund which defeats the whole purpose? This move is akin to raising taxes to help the economy. It doesn’t a genius to see that it doesn’t work in business world and so it probably won’t work in Real Estate world either.

Good work FHA!!! The addage “we’re with the government and we’re here to help” has never been more true…

Get Your FHA Mortgage Application Started — Fees Increase 1/2 Percent Starting Monday, April 5, 2010

On March 30, 2010, in FHA Mortgages, by admin | View Comments

FHA closing costs increase by 1/2 percent April 5 2010Starting Monday, April 5, 2010, getting an FHA mortgage in Tucson and nationwide will be more expensive for borrowers.

In new guidelines set forth earlier this year, the FHA announced plans to raise additional revenue and reduce the overall risk of its mortgage portfolio. 

The changes include the following:

  1. Increase Upfront Mortgage Insurance Premiums from 1.75% to 2.25% for everyone
  2. A plan to reduce seller concessions from 6 percent to 3 percent
  3. An increase in minimum downpayment for FICOs 580 or lower

For your own loan, to avoid being subject to higher loan costs, make sure to have your FHA Case Number assigned prior to Monday, April 5, 2010.  That means you’ll want to give a full mortgage application before the weekend so your lender can register your loan in time for the deadline.

But don’t leave your application to the last minute.

Friday is Good Friday so most banks will be closed. Your true FHA deadline, therefore, is Thursday April 1.

Also worth noting is that the FHA isn’t done with its changes.

In its policy statement, the group also announced its plans to petition Congress to raise monthly mortgage insurance premiums.  The FHA’s formal request, in summary:

  1. Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month
  2. Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing

For now, the request is neither approved nor acknowledged by Congress. It’s merely a request. And in the event that Congress does approves it, the FHA reserves the right to change its projections.  Either way, it means higher costs for consumers. 

The best plan, therefore, is to get your FHA mortgage into underwriting ahead of the switches because borrowing money will be harder, and more costly.

Increase to FHA upfront mortgage insurance on April 5th!

On March 24, 2010, in FHA Mortgages, by Todd Abelson | View Comments

Important reminder on FHA upfront mortgage insurance premiums:

Homebuyers and Homeowners are reminded that effective on FHA loans for which the FHA case number is assigned on or after April 5, 2010, FHA will collect an upfront mortgage insurance premium of 2.25 percent. This policy change will increase premiums for purchase money (now 1.75%) and refinance transactions (now 1.50%) including FHA-to-FHA credit-qualifying and non-credit qualifying streamlined refinance transactions.

For more detailed information on this premium increase, please see HUD/FHA Mortgagee Letter 2010-02 at: 

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-02ml.pdf

Please make every effort to get your contracts ratified or your refinance in process early in the week of March 29, 2010, since it is possible that FHA case numbers requested on Friday or Saturday may not be assigned prior to April 5, 2010, and therefore, be subject to the higher premium.

Call Todd Abelson and Tyler Ford at Sunstreet Mortgage for all your mortgage needs! (520)-331-LEND.

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