Mortgage Insurance Rates Increasing on Louisville Kentucky FHA Loans

Mortgage Insurance Rates Increasing on FHA Loans.

 

Mortgage Insurance Rates Increasing on FHA Loans in Louisville Kentucky

by MERIDITH DOUCETTE on MARCH 21, 2012


FHA Mortgage Insurance Rates Will Be Going Up on All New FHA loans in Louisville Kentucky Assigned April 9, 2012 and After.

FHA Loans are loans insured by the Federal Housing Administration (FHA). These insured loans minimize the risk lenders face by allowing buyers a down payment less than 20% of the price of the home. FHA Loans offer features that are attractive to many home buyers such as:

  • Low Down Payment – as low as 3.5% of the purchase price of the home
  • Low Closing Costs – closing costs, mortgage insurance and other fees can be included in the loan
  • Easier Credit Qualifications – those who don’t have the credit score or history to qualify for a conventional loan may qualify for FHA financing

Because FHA loans allow a down payment of less than 20% of the purchase price of the home, mortgage insurance is required for these loans. Mortgage insurance premiums on FHA loans are much less than premiums for private mortgage insurance and most of the premium can be added to the loan. For FHA loans, a portion of the Mortgage Insurance Premium (MIP) known as the Up Front Mortgage Insurance Premium (UFMIP) is added to the loan balance rather than being paid out-of-pocket at closing. Then, the remaining portion of the MIP due is added to the monthly payment.

While FHA mortgage insurance premiums will continue to be lower than premiums for private mortgage insurance, FHA mortgage insurance rates will be going up on all new loans assigned April 9, 2012 and after. The UFMIP rate, which is included in the loan, will change from 1.00% to 1.75% of the loan amount. The MIP rate will change from 1.15% to 1.25% of the loan amount. Here is an example of how these changes will impact a loan for $400,000*:

New FHA Loan
(After April 1, 2012)
Old FHA Loan
(March 31, 2012 or prior)
Purchase Price
$400,000
$400,000
Down Payment %
3.5%
3.5%
Down Payment Amount ($)
$14,000
$14,000
Interest Rate
4.25%
4.25%
Up Front Mortgage Insurance Rate
1.750%
1.000%
Mortgate Insurance Rate
1.250%
1.150%
Tax Rate
1.000%

1.000%

Loan Amount
$392,755
$389,860
Payment 1
$1,932
$1,918
MI Payment
$409
$374
Total Payment
$2,341
$2,291
Taxes Monthly
$333
$333
Insurance Monthly
$100
$100
Other (HOA Dues)
$144
$144
Total Monthly Payment
$2,919
$2,869

In the example above, the monthly payment goes up $50 per month. These changes can be compared as having a net effect of raising the interest rate of the loan by .25%. To buy down the interest rate by .25% to get the payment more in line with the former FHA insurance rates would cost about $8,000 out-of-pocket.

If you are planning to purchase a home using FHA financing, save money by purchasing your new homebefore April 1, 2012 to meet the April 9, 2012 deadline for the change in mortgage insurance premium rates.

*This purchase scenario is used for demonstration purposes only and may not be available at any or all communities.  This information is provided for general awareness only, and is not intended for the purpose of providing legal, accounting, tax advice or consulting of any kind.

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*

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18 thoughts on “Mortgage Insurance Rates Increasing on Louisville Kentucky FHA Loans

  1. […] Mortgage Insurance Rates Increasing on Louisville Kentucky FHA Loans (louisvillemortgageguide.com) 38.242149 -85.576818 Share this:LinkedInTumblrEmailPrintMoreFacebookDiggRedditTwitterStumbleUponLike this:LikeOne blogger likes this post. Categories: Current Mortgage Rates in KY, rates Tags: Credit history, Credit Reports, Credit score, Down payment, Fannie Mae, Federal Housing Administration, FHA loan, Freddie Mac, Government, Government agency, Home, Interest rate, Kentucky, kentucky usda lenders, KHC’s (Kentucky Housing ) First Mortgage Government, louisville, Louisville Kentucky, Louisville Kentucky First Time Home Buyer, Mortgage, Mortgage broker, Mortgage Credit Certificate, Mortgage loan, mortgage rates Kentucky, Mortgages, Refinancing, Rural housing, United States Department of Agriculture, USDA, VA loan Comments (15) Trackbacks (108) Leave a comment Trackback […]

  2. […] Mortgage Insurance Rates Increasing on Louisville Kentucky FHA Loans (louisvillemortgageguide.com) 38.242149 -85.576818 Share this:EmailDiggLinkedInFacebookRedditTwitterStumbleUponTumblrLike this:LikeBe the first to like this post. […]

  3. There are a ton of variables that come into play that can affect the Mortgage. The best advice I can give any homeowner is to do your research and take the time to find a well educated agent or broker, securing a knowledgeable agent will help a lot, simply due to the fact that they’re time consuming and they’re able to assist more homeowners this way.

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