My Flower Mound and Frisco Mortgage clients are talking about these FHA changes, and have lots of questions, so I figured all my other clients in Texas would appreciate the answers to these frequently asking questions too…regarding the changes coming about FHA MIP effective April 9, 2012. These are new changes, we addressed the previous changes from months ago in a video blog. Follow link to previous FHA changes blog to see Video link.
Few people realize that FHA actually has two forms of Mortgage Insurance that you pay when using them. Read on to realize.
Frequently Asked Questions
term definitions below…MIP = Mortgage Insurance Premium, Annual Mortgage Insurance = is a sum of insurance calculated over 12 months that you pay monthly, Up Front Mortgage Insurance = is a lump sum of mortgage insurance that you can roll into the loan (for other FHA basics):
How can I avoid being included with the new changes effective April 9? Your lender needs to order your FHA case number on or before April the 8th. To order a case number, you must have a property address, so if you haven’t found a property, you are likely going to be under the new FHA MIP plan. (MIP=Mortgage Insurance Premium)
How much is the monthly portion, better known as the Annual Mortgage Insurance, increasing? If you are putting down 5% down payment or less and using a 30yr fixed FHA loan, the new rate will increase from 1.15% to 1.25%. That is an increase of .1%. If you had a $100,000 loan amount, then that will increase your payment by about $8 a month from where it is now. If you have a $200,000 loan amount, it’s about $16 more a month. So, not a big increase.
How much is the Up Front Mortgage Insurance Premium increasing on the new plan? The Up Front Mortgage Insurance Premium is increase from 1% to 1.75%. This portion of mortgage insurance is typically rolled into the loan and therefore will minimally influence your payment. Although, the increase is pretty significant. For a $100,000 loan, that would increase your loan by an additional $750 compared to the previous amount, and $1500 increase if your loan was $200,000.
Please feel free to call me directly if you have more questions, or would like me to give you a free loan prequalification. My number is 469-450-2723. Or, click on the Apply Today tab at the top right of this site, and I’ll receive your private information directly.