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2013-02-13 07:54:10
FHA Mortgage Insurance: Increasing Rate & Length

 

Two changes are coming with FHA 30 YR Mortgage Loans:

#1 On homes not in contract (not pending) and assigned an FHA case number by April 1, 2013, the monthly insurance rate is increasing 10 Basis Points

  • 30 year fixed with loan to values of 95% or lower will increase to 130 bps (from 120)
  • 30 year fixed with loan to values greater than 95% will increase to 135 bps (from 125)

 

#2 And considerably more important is that borrowers will no longer be allowed to eliminate their monthly mortgage insurance.  This will take affect on homes not in contract and assigned an FHA case number by June 3, 2013.

 

What's this mean for an FHA home buyer? 

Currently an FHA buyer can eliminate their mortgage insurance after 5 years AND when the value of their loan vs. their appreciated home is at 78% or less.  Come June 3, 2013, FHA mortgage insurance will be required for the life of the loan on any new loan.

To illustrate: lets look at a home that has an FHA loan of $200,000.  The Mortgage Insurance on this home will be: $225 per month.  Let's assume the buyer would be able to eliminate this mortgage insurance currently in 7 years.  Under the new regulations the buyer would continue to pay this for the life of the loan.  If they make their regular payments for 30 years this would add:  $62,100 more in payment if they get into contract on or after June 2, 2013  vs. before this date.

 

 

for more detail read:  mortgagereporter.com

 
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