FHA borrowers and home buyers, mayday mayday mayday. FHA is upping the anti again. We are expecting FHA to make some changes in April of this year, 2013. These changes will not only cost you more money on your monthly, but they will also cost you more money for the life of the loan. These are additional changes like the other changes FHA has made in recent years to increase costs too.
What are the changes FHA is making to MIP and/or UPFMIP in April of 2013?
FHA will increase its annual mortgage insurance premium (MIP) for most new mortgages by 10 basis points or by 0.10 percent. FHA will increase premiums on jumbo mortgages ($625,500 or larger) by 5 basis points or 0.05 percent, to the maximum authorized annual mortgage insurance premium. These premium increases exclude certain streamline refinance transactions.
How does MIP in FHA effect my monthly payment?
Here is an example of how this will affect you if you are using FHA to buy a home and you are buying a $200,000 home putting down the minimum 3.5% required by FHA. In this case, your original loan amount before rolling in up front mortgage insurance is $193,000. For simple numbers, we’ll just use this number to calculate your above mentioned “annual mortgage insurance premium”. Currently the MIP factor is 1.25%. Multiply that by the $193,000 and you get $2,412,50, and they divide this by 12 to get your monthly figure…in this case $201.04 a month. By adding .10 percent to this, it will increase this monthly amount to $217.13…$16.09 a month higher. Before this deadline, that would only be paid until you reached 78% loan to value, but now, not only do you pay a higher amount, but now you will be paying it for the life of the loan. Imagine the gross increase over 30yrs that FHA will be collecting.
HUD is the agency that approves these changes. On the HUD website (HUD defines HUD as HUD: the U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.)
Contact your trusted FHA Lender to get specifics or apply for your FHA mortgage.