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!

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…