FHA's NEW Upfront and Monthly Mortgage Insurance Guidelines
To add more confusion to the already confusing market, HUD (U.S. Department of Housing and Urban Development) is AGAIN changing their upfront and monthly mortgage insurance premium guidelines for all NEW FHA case numbers assigned commencing OCTOBER 1, 2008 to be consistent with the Housing and Economic Recovery Act of 2008.
FHA guidelines had been unchanged for years. But, back on July 14, 2008, FHA had introduced new risk based premiums for both the upfront MIP and the monthly mortgage insurance on FHA loans. Those guidelines rewarded better qualified buyers with lower premiums, while charging riskier buyers with higher premiums. To avoid any confusion, I will not list those here, as they will be gone shortly.
EFFECTIVE 10/1/2008
UPFRONT PREMIUMS:
1) FHA will charge upfront MIP (mortgage insurance premium) of 1.75% of the loan amount on all purchase transactions
2) Streamline refinances (all types) = 1.50% of the loan amount
3) FHASecure (delinquent mortgagors) = 3.00% of the loan amount
MONTHLY PREMIUMS:
30-year loans, less than 95% LTV = .50%
30-year loans, greater than 95% LTV = .55%
15-year loans, less than 90% LTV = None
15-year loans, greater than 90% LTV = .25%
FHA secure, all loan terms, less than 95% LTV = .50%
FHASecure, all loan terms, greater than 95% LTV = .55%
There are many other changes being made to not only FHA loans, but just about every single loan option and program in the market. Therefore our advice to you is to be smart, ask questions, and get good answers by only working with experienced dedicated professionals
More than likely, this is one of the largest and most important financial transactions most people will ever make. They might do this only four or five times in their entire life, but we do this every single day. It's their home and their future. It's our profession and our passion. We're ready to work for your best interest.
We provide FHA loans in Minnesota (MN), Wisconsin (WI), and Florida (FL) only. Check us out online at www.JoeMetzler.com.
(c) 2008 Metzler Enterprises, www.JoeMetzler.com
Joseph, thanks for the updated information on the whole FHA deal. This is must know stuff and you have simplified it here for us in your post. Thanks again. JC in Vegas
But don't you think that is a good idea? People that are higher risk should put down a higher down payment or pay a higher insurance premium. That's the only way the economy is going to recover. The same Recovery Act also stipulates that effective Oct 1, loan officers will need to be licensed by the state, with a credit check and background check. The loan officers that use to work in my office (and now work for banks) have never taken a test or even continuing education. That's pretty sad when you realize the guy at your Bank processing your loan (and handling your money) may not even know how to handle his own finances; AND may not have taken a test to see if he REALLY knows the difference between a 5/1 Arm on a 80/20 and a 80/15/5 loan. I think, on the whole, the Recovery Act has it's benefits.
-AFM
Thanks for thr information it was very helpful