UFMIP « Home Loan Information

3Sep/100

FHA mortgage insurance changes official

HUD has issued Mortgagee Letter 2010-28 changing the Upfront and Annual Mortgage Insurance Premiums effective with case numbers assigned on or after October 4, 2010 as follows:

Upfront Premiums

Loan Type	Upfront Premium Requirement
Purchase & Full Credit Qualifying Refinances	100 BPS
Streamline Refinances (all types)	100 BPS

Annual Premiums

LTV	Annual Premiums for Terms >15 Years
= or <95%	85 BPS
>95%	90 BPS

LTV	Annual Premiums for Terms =or <15 Years
= or <90%	None
>90%	25 BPS

These premiums are effective with case numbers assigned on or after October 4, 2010.

Tagged as: fha, georgia, home loans, mip, mortgage insurance, refinance, UFMIP No Comments

10Aug/101

FHA insurance changes

: Image via Wikipedia

The cause for celebration over Federal Housing Administration lowering the upfront mortgage insurance premium is short lived. Concurrent to lowering the upfront fee is the increase of the monthly insurance premium fee.

Lowering the UFMIP from 2.25% to 1% will certainly decrease the amount of repayment. However, increasing the MIP from .55% to .90% (on loans with a down payment of 5% or less) will increase the cost of repayment significantly. The end result will be the FHA having more operating capital if the result is not a significant decrease in the number of sales due to borrowers not being able to qualify on debt-to-income ratios.

Currently, if you are purchasing a home at $200,000 (for example) with the FHA minimum down payment of 3.5% your base loan amount, prior to the UFMIP add back, is $193,000. Adding back the UFMIP, at the current rate of 2.25%, brings the loan amount to $197,343. The MIP cost per month, at the current rate of .55%, is $90.45 per month.

After October 4th 2010 the UFMIP will be only 1% meaning the loan amount including UFMIP will be $194,930 – a savings of $2413 on the purchase price. However with the new MIP rate of .90% the monthly MIP addition to the payment will be $130 – resulting in a payment approximately $40 per month higher. At that rate the savings on UFMIP ($1900) will be lost in about 4 years.

One plus is that, at least currently, MIP does have a tax benefit and the buyer should consult their tax preparer for detailed information on the tax benefits of a monthly mortgage insurance premium.

UPDATE 1-US FHA set to increase borrowing costs next month (reuters.com)
Senate approves higher government mortgage fees for new loans (usatoday.com)
Higher Government Mortgage Fees Approved By Senate (huffingtonpost.com)
US FHA set to increase borrowing costs next month (reuters.com)
FHA Insured Mortgages: A Disaster In The Making (businessinsider.com)

Tagged as: down payment, Federal Housing Administration, Loan, mortgage, mortgage insurance, UFMIP 1 Comment

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