FHA to increase cost and extend insurance term

FHA to increase cost and extend insurance term

Get the pens out and write the contracts as The Federal Housing Administration (FHA) has increased the cost and the duration of the mortgage insurance premium (MIP) and the upfront fees. Anything with an FHA loan number after April 1, 2013 will be effected with the higher upfront funding fee charged for funding an FHA loan. Mortgage insurance traditionally stopped after the loan to value ratio fell to 78% or less but  after June 3, 2013 the period for charging the mortgage insurance premium will be changed as well as the previously exempt 15 year mortgages with loan value ratios of less than 78% will no longer have the exemption. Please see the charts below to simplify the some of the changes in the MIP to expect.

The section of this ML that increases the annual MIP is effective for case numbers assigned on or after April 1, 2013, except as noted below.

The following sections of this ML are effective for all mortgages with FHA case numbers assigned on or after June 3, 2013:

revision to the period for assessing the annual MIP;

removal of the exemption from the annual MIP for loans with terms of 15

years or less and LTVs of less than or equal to 78 percent at origination;

increase in the annual MIP for mortgages with terms less than or equal to

15 years and LTV ratios less than or equal to 78 percent at origination.

For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. See 12 U.S.C. § 1709(c)(2)(B).

For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP)) less than or equal to 90 percent LTV, the annual MIP will be assessed until the end of the mortgage term or for the first 11 years of the mortgage term, whichever occurs first.

For any mortgage involving an original principal obligation (excluding financed UFMIP) with an LTV greater than 90 percent, FHA will assess the annual MIP until the end of the mortgage term or for the first 30 years of the term, whichever occurs first.

Note: FHA calculates LTV as a percentage by dividing the loan amount (prior to the financing of any UFMIP) by the lesser of the purchase price (if applicable) or the appraised value of the home. For streamline refinances without appraisals, FHA uses the original appraised value of the property to calculate the LTV.

 

So for your clients that are currently on the fence about buying a home using FHA financing they need to sign up for their loans as quickly as possible as this will affect their upfront fees and their monthly payment.


Michael Bray Headshot
Author:
Phone: 915-549-1770
Dated: February 12th 2013
Views: 3,742
About Michael: ...

Property Search








RSS Feed

View our latest blog posts in your RSS reader. Click here to access. RSS

Search Blog

Recent Blogs

Guide To Buying A Home - Planning to buy a home this?
Need An Experienced Lender - Milton Kinnard, Jr
Four Ways To Jumpstart Your Credit Score - Improving your credit score can
The FHA Mortgage Insurance Turmoil Discussion - https://elpasoblog.wordpress.com

Saved Properties

This is a list of your favorite properties. We will email you if a property is reduced or leaves the market.

Click 'Save' to add a property to this list.

Register / Login

New & returning visitors please enter your information to login.

By clicking 'register' you are agreeing to our terms of use & giving us expressed written consent to contact you.

Questions? Comments? Complaints?

This message will go directly to the head of our team.

Location & Address

Exit Realty El Paso
299 Shadow Mountain
El Paso, TX
915-209-4787
915-585-9599

Other Locations