As of August 5, 2010 Congress passed bill H.R. 5981, this bill effectively changes the upfront mortgage insurance premium (MIP) and monthly mortgage insurance for FHA loans. The good news is the upfront mortgage Insurance is being reduced to 1.00%. This is down from a high of 2.25%. This mortgage insurance was usually rolled into the mortgage, not affecting the clients all that much. This is good news, thou.
Now the bad news. The monthly mortgage insurance is going from .55% to .85%-.90%. This change is for 30year mortgages only. If the loan to value(LTV) is over 95%(max 96.5%) the new monthly mortgage insurance is .90%, under 95% ltv is .85%. On a loan amount of $100k, this would increase their payment by $29. This change will obviously affect how much home someone can afford.
This change is to go into affect Oct 4th, 2010. So any FHA mortgage started on or after Oct 4th, will follow the new rules. Please understand FHA had to make this decision, since the previous mortgage insurance structure was costing them money and putting FHA in a really bad position. If you are thinking of buying a home in the future, now maybe the best time for you to do it. Please call or email me with any questions.
David Krichmar
Mortgage Banker NMLS#293883
Weststar Mortgage Corporation #93243 dba Core Lending
Has Written For Realtor Magazine, Houston Agent Magazine, Scotsman Mortgage Guide
Approved MCE Instructor
Office:832-689-6012
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