Thursday, February 21, 2013 / by Jessica Deubner
check this out...call today if you need to wrap up an FHA case # before these increases! Jessica Deubner 614-554-6013 or email@example.com
New FHA Mortgage Insurance Premiums, Downpayment Minimums For Spring 2013
Data from Inside FHA Lending shows that mortgage bankers funded $233 billion in FHA-insured loans last year, marking a 22 percent increase from the year prior. Recently announced changes, however, may derail that success.
For all FHA borrowers, the Federal Housing Administration has set deadlines for a new mortgage insurance premium schedule; an increase in downpayment minimums; and, new underwriting standards for loans with low credit scores.
All FHA mortgages will be affected.
FHA Mortgage Insurance Premium Changes
The FHA is an insurer of mortgage loans and, by law, it is required to maintain a 2% reserve in its Mutual Mortgage Insurance (MMI) fund. Currently, because of bad loans made last decade, the FHA's reserves are -1.44 percent.
In an effort to rebuild the MMI, therefore, the Federal Housing Administration has planned some changes -- chief among them, an increase in annual mortgage insurance premiums on most FHA-backed mortgages.
New MIP Begins April 1, 2013
Beginning April 1, 2013, most FHA-backed mortgages will be subject to an MIP increase of 10 basis points annually, or 0.10 percentage points. The increase applies to all loan terms, including 15-year fixed-rate FHA loans.
In addition, insurance premiums for jumbo FHA loans will change, too.
Loans with terms of 15 years or less, and balances between $625,500 and $729,750, will be subject to an increase of 10 basis points annually, or 0.10 percentage points. These loans are only available in designated "high cost" areas which include Orange County, California; Montgomery County, Maryland; and Eagle County, Colorado, among others.
Loans with terms of between fifteen and 30 years will be adjusted higher by 5 basis points annually, or 0.05 percentage points, to a the maximum 1.55% annual MIP rate as allowed by law.
The MIP increase will not affect FHA Streamline Refinances which replace FHA loans from before June 1, 2009.
New FHA MIP Cancelation Policy Begins June 3, 2013
The Federal Housing Administration also made a second MIP-related announcement -- the agency is reversing its policy which allows FHA-backed homeowners to cancel mortgage insurance premiums once the outstanding principal balance of an FHA loan reaches 78 percent of the original balance.
Going forward, the FHA will disallow the removal of MIP throughout the life of a loan, if the loan's starting loan balance is higher than 90% of its appraised value. This is true for purchases and refinances.
For loans in which the loan-to-value begins at 90 percent or less, mortgage insurance premiums must be paid for 11 years. This change goes into effect June 3, 2013.