FHA To Change Its Mortgage Insurance Premium Schedule Monday, June 11, 2012

Beginning Monday, June 11, the FHA is changing its mortgage insurance premium schedule for the second time this year.

Some FHA mortgage applicants will pay lower mortgage insurance premiums going forward. Others will pay more. The new premiums apply to all FHA mortgages, both purchase and refinance.

The MIP update will be the 5th time in four years that the FHA has changed its mortgage insurance premium schedule.

FHA-backed homeowners who have not refinanced within the last 3 years will benefit from the new MIP. This is because, beginning with all FHA Case Numbers assigned on, or after, June 11, 2012, homeowners whose current FHA mortgage pre-dates June 1, 2009 will be entitled to dramatically reduced annual mortgage insurance premiums and almost zero upfront MIP via the FHA Streamline Refinance program.

Whereas new FHA applicants may pay up to 1.25% per year for annual mortgage insurance plus 175 basis points at closing for upfront MIP, the "grandfathered" FHA applicants will pay just 0.55% per year for mortgage insurance and 1 basis point at closing.

Assuming an FHA loan size of $200,000, the savings are large :

• New FHA applicant : $208 per month for annual MIP; $3,500 due at closing for upfront MIP.
• Pre-June 2009 FHA applicant : $92 per month for annual MIP; $20 due at closing for upfront MIP.

The premiums apply to all FHA mortgage applicants, regardless of loan product or term. For example, 15-year FHA mortgage will follow the same mortgage insurance premium schedule as a 30-year FHA mortgages.

Another class of FHA-backed homeowners won't get so lucky. For homeowners in high-cost areas whose mortgages are between $625,500 and the local FHA loan limit, annual mortgage insurance premiums will be raised by 0.25% for all 15-year and 30-year loan terms.

For loan sizes above $625,500, the new annual FHA mortgage insurance premiums are as follows :

• Loan term of 15 years or fewer, loan-to-value of 90% or less : 0.35% per year
• Loan term of 15 years or fewer, loan-to-value greater than 90% : 0.60% per year
• Loan term of more than 15 years, loan-to-value of 95% or less : 1.45% per year
• Loan term of more than 15 years, loan-to-value greater than 95% : 1.50% per year

FHA-backed homeowners with loan terms of 15 years or fewer, and with loan-to-values below 78%, are exempt from annual MIP. Upfront MIP payments, however, remain mandatory.

The FHA continues to tinker with its mortgage insurance premiums, attempting to strike a balance between affordability for its homeowners and solvency for its program. Experts expect the FHA to change its premiums again. And, when it does, it's likely that premiums will rise.

If your FHA mortgage will be for more than $625,000, and you plan to make a purchase or refinance application soon, it's best to get your FHA Case Number prior to Monday, June 11. Otherwise, you'll pay higher annual MIP.

Against a $700,000 mortgage, the extra 0.25% in MIP per year will add $1,750 to your annual housing payment.

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FHA Mortgage Insurance Premiums Increasing April 9, 2012

Planning to use an FHA-backed mortgage for your next home loan? You might want to get your application in gear today.

Beginning next week, the Federal Housing Administration (FHA) is changing the way it charges mortgage insurance to U.S. homeowners. For the fourth time since 2010, FHA mortgage insurance premiums are rising for all FHA-backed homeowners.

For FHA Case Numbers assigned on, or after, Monday, April 9, 2012, there are two planned changes.

First, FHA Upfront Mortgage Insurance Premiums (UFMIP) will increase by 75 basis points to 1.75%, or $1,750 per $100,000 borrowed. Upfront Mortgage Insurance Premium is paid at closing, and typically added to an FHA borrower's loan size.

The current UFMIP rate is 1.000 percent.

Second, annual FHA mortgage insurance premiums are rising. All new FHA-backed loans will be subject to a 10 basis point increase in annual mortgage insurance premiums, costing homeowners an extra $100 per $100,000 borrowed per year.

The new FHA annual mortgage insurance premium schedule follows :

• 15-year loan term, loan-to-value > 90% : 0.60% MIP per year
• 15-year loan term, loan-to-value <= 90% : 0.35% MIP per year
• 15-year loan term, loan-to-value <= 78% : 0.00% MIP per year
• 30-year loan term, loan-to-value > 95% : 1.25% MIP per year
• 30-year loan term, loan-to-value <= 95% : 1.20% MIP per year

In addition, for loans above $625,500, beginning with FHA Case Numbers assigned on, or after, June 11, 2012, there will be an additional 25 basis point increase in annual MIP.

To calculate your monthly MIP obligation as a FHA homeowners, multiply your starting loan size by your insurance rate from the list above, then divide by 12.

Note that the FHA mortgage insurance changes apply to new FHA Case Numbers only. If you have an FHA mortgage approval in-process, or an existing FHA home loan, you are not subject to the new MIP schedule. To avoid paying the FHA's new MIP schedule, therefore, begin your FHA mortgage application today.

Once your FHA Case Number is assigned, you're locked in to today's lower premiums.

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FHA Drops Upfront Mortgage Insurance Premium To 0.01% For Qualified Borrowers

The FHA is making more changes to its flagship FHA Streamline Refinance program.

Beginning mid-June 2012, certain current, FHA-backed homeowners will be able to refinance their existing FHA mortgage into a new one, without having to pay the government-backed group's new, costly mortgage insurance premium schedule.

Earlier this week, the FHA rolled out its new MIP schedule.

Beginning April 9, 2012, new FHA mortgages are subject to a 1.75% upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium of up to 1.25% for loan sizes up to, and including, $625,500; or 1.60% for loan sizes exceeding $625,500.

Upfront MIP is typically added to the loan size as a lump sum. Annual MIP is paid via 12 monthly installments. Both add to the long-term costs of homeownership.

However, the FHA's new MIP schedules will not apply to all FHA-backed homeowners equally. Homeowners whose FHA mortgages were endorsed prior to June 1, 2009 will benefit from a different, less costly MIP schedule.

For these homeowners in search of a streamline, the MIP schedule is as follows :

• Upfront MIP : 0.01% of the loan size
• Annual MIP : 0.55% of the loan size, with no adjuster for loan sizes over $625,500

The new schedule is detailed in FHA Mortgagee Letter 12-04 and it lowers the cost of FHA Streamline Refinancing for long-time, FHA-backed households in WA and nationwide to almost nothing.

As a real-life example, an FHA-backed homeowner whose $100,000 mortgage dates to 2008 could refinance via the FHA Streamline Refinance program and pay just $10 in upfront MIP, with a corresponding annual MIP payment of just $550, or $45.83 monthly. 

By comparison, every other FHA-backed homeowner with a $100,000 mortgage pays $1,750 in UFMIP and as much as $1,600 in annual MIP.

The new streamline refinance MIP schedule is in effect for FHA mortgage applications with case numbers assigned on, or after, June 11, 2012. It is not available for loan applications made prior to that date.

There are lots of dates and deadlines in the FHA's new streamline program. If you're too early -- or too late --  you could miss your optimal refinance window. Talk with your loan officer, therefore, and put a plan in place. You'll be glad to be prepared.  

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FHA To Raise Mortgage Insurance Premiums April 1, 2012

Beginning April 1, 2012, the FHA is once again raising mortgage insurance premiums (MIP) on its newly-insured borrowers throughout Renton and the country.

It's the FHA's fourth such increase in the last two years.

Beginning April 1, 2012, upfront mortgage insurance premiums will be higher by 75 basis points, or 0.75%; and annual mortgage insurance premiums will be higher by 10 basis points per year, or 0.10%.

For borrowers with a loan size of $200,000, the new MIP will add $1,500 in one-time loan costs, plus an on-going, annual $200 increase in total mortgage insurance premiums paid.

All new FHA loans are subject to the increase -- purchases and refinances.

The FHA is increasing its mortgage insurance premiums because, as an entity, the FHA is insuring a much larger percentage of the U.S. mortgage market than ever before. 

In 2006, the FHA insured 2 percent of all purchase-money mortgages. In 2011, that figure jumped to 18 percent. Unfortunately, as the FHA has insured more loans, it's number of loans in default have climbed, too, forcing the FHA to boost its reserves.

Beginning April 1, 2012, the new FHA annual mortgage insurance premium schedule is as follows :

• 15-year loan term, loan-to-value > 90% : 0.60% MIP per year
• 15-year loan term, loan-to-value <= 90% : 0.35% MIP per year
• 30-year loan term, loan-to-value > 95% : 1.25% MIP per year
• 30-year loan term, loan-to-value <= 95% : 1.20% MIP per year

In order to calculate what your FHA annual mortgage insurance premium would be on a monthly basis, multiply your beginning loan size by your insurance premium in the chart above, then divide by 12.

In addition, for loans over $625,500, beginning June 1, 2012, there is an additional 25 basis point increase to annual MIP.

To avoid paying the new FHA mortgage insurance premiums, start your FHA mortgage application today. Existing FHA-insured homeowners will not be affected by the change.

Mortgage insurance premiums will not rise for loans already made.

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Is An FHA Mortgage Better Than A Conforming One?

The FHA is insuring a greater percentage of loans than during any time in recent history. In 2006, it insured roughly 5 percent of the purchase mortgage market. Today, it insures one-quarter. "Going FHA" is more common than ever before -- but is it better?

The answer -- like most things in mortgage -- depends on your circumstance.

Like its conforming counterpart, an FHA-insured mortgage is available as a fixed-rate loan and as an adjustable-rate one. Payments are made monthly and come without prepayment penalties.

That's where the similarities end, however, and decision-making begins. For homeowners and buyers across Seattle , FHA mortgages carry a different set rules as compared to conforming loans through Fannie Mae or Freddie Mac that can render them more -- or less -- attractive for financing.

For example:

• FHA mortgages can be assumed by a subsequent buyer. Conforming loans may not.
• FHA mortgages require mortgage insurance, regardless of downpayment. Conforming loans do not.
• FHA mortgages do not have loan-level pricing adjustment. Conforming loans do.

FHA mortgages also require smaller downpayment requirements versus a comparable conforming mortgage. FHA calls for a minimum downpayment of 3.5%. Conforming mortgages often require 5 percent or more.

And, lastly, FHA mortgages are priced differently from conforming ones. Since 2005, the average FHA mortgage rate has been below the average conforming mortgage rate more than 50% of the time, meaning that an FHA mortgage's principal + interest payment is lower than a comparable Fannie/Freddie loan.

Today, conforming mortgage rates are lower.

So, which is better -- FHA loans or conforming ones? Like most things in mortgage, it depends. FHA-insured loans can be big money-savers or money-wasters. To find out which is best for you, ask your loan officer for today's market interest rates and study the results.

With less than 20% equity, the answer is often clear.

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Get Your Applications In : FHA Mortgage Insurance Premiums Rising 0.25 Percent April 18, 2011

After this week ends, the FHA is raising mortgage insurance premiums on its new Renton borrowers. It's the FHA's third such increase in the last 12 months.

Beginning with FHA Case Numbers assigned April 18, 2011, mortgage insurance premiums will be higher by 25 basis points per year, or 0.25%.

Against a $200,000 loan size, the MIP increase adds $500 to an FHA-insured borrower's annual cost of homeownership. All new FHA loans are subject to the increase -- purchases and refinances.

Existing FHA-insured homeowners across WA are unaffected. Premiums do not rise for loans already made.

The FHA is increasing its mortgage insurance rates because, as a group, the FHA is insuring a much larger percentage of the U.S. housing market. 

In 2006, the FHA held a 4 percent market share. By 2010, that share ballooned to 19 percent and, today, it's estimated to be even higher.

In its official statement, the FHA says that the quarter-point MIP bump will "significantly strengthen" its reserves which are depleted because of delinquencies and defaults. By law, the FHA's capital reserves must meet certain levels. 

Therefore, to meet these requirements, the FHA is rolling out its new mortgage insurance premium schedule:

• 15-year loan term, loan-to-value > 90% : 0.50% MIP per year
• 15-year loan term, loan-to-value <= 90% : 0.25% MIP per year
• 30-year loan term, loan-to-value > 95% : 1.15% MIP per year
• 30-year loan term, loan-to-value <= 95% : 1.10% MIP per year

In order to calculate what your FHA monthly mortgage insurance premium would be, multiply your beginning loan size by your insurance premium in the chart above, then divide by 12. 

The FHA also charges a 1 percent, up-front mortgage insurance premium at closing. That figure remains unchanged.

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FHA : Monthly Mortgage Insurance Premiums To Rise April 18, 2011

For the third time in 12 months, the FHA is changing its mortgage insurance costs. 

Effective for all FHA case numbers assigned on, or after, April 18, 2011, annual mortgage insurance premiums (MIP) will increase 25 basis points.

The change will add $250 to an FHA-insured homeowner's annual loan costs per $100,000 borrowed, and applies to all borrower's equally. Current FHA borrowers are unaffected.

To understand the FHA is to understand why premiums are rising.

As an institution, the Federal Housing Administration plays a much larger role in the U.S. housing market today than it did just 5 years ago. According to its own records, the FHA's percentage of purchase money business in WA and nationwide expanded from 4 percent in FY 2006 to 19 percent in FY 2010.

Rapid growth like this has strained the FHA's capital and, indeed, in its official statement, the FHA alludes to this, stating that the MIP increase will "significantly strengthen" its reserves. By law, the FHA must maintain a certain minimum level of reserves.

FHA mortgage insurance varies by loan term, and by loan-to-value and, beginning April 18, 2011, the new insurance premiums are as follows:

• 15-year loan term, loan-to-value > 90% : 0.50% per year
• 15-year loan term, loan-to-value <= 90% : 0.25% per year
• 30-year loan term, loan-to-value > 95% : 1.15% per year
• 30-year loan term, loan-to-value <= 95% : 1.10% per year

To calculate your monthly mortgage insurance premium, multiply your starting loan size by your insurance premium, and divide by 12. 

There is no change planned to the 1 percent upfront mortgage insurance premium charged by the FHA.

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SI Real Estate News | FHA Launches Refi Opportunity to Underwater Homeowners

Real estate mortgage holders in the Tampa Bay area, and across the country, can now seek relief on their mortgage with a new Federal Housing Administration (FHA) refinancing program. According to a press release FHA Launches Short Refi Opportunity for Underwater Homeowners dated August 6, 2010, “Starting Sept. 7, 2010, the Federal Housing Administration (FHA) will offer certain ‘underwater’ non-FHA borrowers a new FHA-insured mortgage. To qualify, an owner must be current on his existing mortgage, and his lender must agree to write off at least 10 percent of the unpaid principal on the first mortgage.”

This is a drastic effort to help responsible homeowners who, like so many, owe more on their mortgage than their home is worth, which therefore puts them in the so-called “underwater” category. The effort is one of many real estate and financial remedies employed by the U.S. Department of Housing and Urban Development to help bring stabilization to the housing market and the overall economic stability of the country.

FHA Commissioner David H. Stevens stated, “We’re throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined. This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”

To qualify for this new refinancing program, homeowners must:

• Owe more on their mortgage than their home is worth
• Be current on their existing mortgage
• Must qualify for the new loan under standard FHA underwriting requirements
• Have a credit score equal to or greater than 500
• The property must be the homeowner’s primary residence
• The borrower’s existing first lien holder must agree to write off at least 10% of their unpaid principal balance, bringing that borrower’s combined loan-to-value ratio to no greater than 115%
• The existing loan must not be an FHA-loan insured
• The refinanced first mortgage must have a loan-to-value of no more than 97.75%

"In order to help facilitate this refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.”

This effort following on the heels of the First-Time Homebuyers Tax Credit and the Move-Up/Repeat Homebuyers Tax Credit is leading the way to the stabilization of the housing market in Tampa, Florida. While not everyone will qualify for this refinancing program, those who do should contact their lenders to find out if they will agree to write down part of the unpaid principal.

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