April 2012: The New (& Expensive) FHA Mortgage Insurance Premium (MIP) Schedule

April 2012: The New (& Expensive) FHA Mortgage Insurance Premium (MIP) Schedule.

via April 2012: The New (& Expensive) FHA Mortgage Insurance Premium (MIP) Schedule.

 

The FHA will raise its mortgage insurance premiums April 1, 2012. All FHA mortgage applicants — first-time buyers, repeat buyers, and users of the FHA Streamline Refinance program — will be subject to the new fees.


New FHA Mortgage Insurance Premium Schedules

The new FHA mortgage insurance premium schedule raises FHA loan costs significantly.

FHA mortgage insurance is paid in two parts.

The first part is the “Upfront Mortgage Insurance Premium”. Sometimes abbreviated as UFMIP, upfront mortgage insurance premiums will rise from 1.000% of your FHA loan size to 1.750% of your FHA loan size.

For example, if you live in Chicago, Illinois and you borrow up to the FHA’s local loan limit of $417,000, your upfront mortgage insurance premium will rise 75% from $4,170 to $7,298. This amount is added to your loan size. FHA upfront MIP is not paid via cash. You’ll pay interest on this amount for the life of your loan.

The changes in the FHA’s annual mortgage insurance premiums (MIP) are less extreme, rising only 10 basis points.

The new schedule, for loans with case numbers assigned on or after April 1, 2012:

  • 15-year loan terms with loan-to-value over 90% : 0.60 percent annual MIP
  • 15-year loan terms with loan-t0-value under 90% : 0.35 percent annual MIP
  • 30-year loan terms with loan-to-value over 95% : 1.25 percent annual MIP
  • 30-year loan terms with loan-to-value under 95% : 1.20 percent annual MIP

Furthermore, all FHA mortgages made for $625,500 or more will be subject to an additional 0.25 percent annual mortgage insurance fee.

Loans made prior to April 1, 2012 will use the old FHA mortgage insurance schedule:

  • 15-year loan terms with loan-to-value over 90% : 0.50 percent annual MIP
  • 15-year loan terms with loan-t0-value under 90% : 0.25 percent annual MIP
  • 30-year loan terms with loan-to-value over 95% : 1.15 percent annual MIP
  • 30-year loan terms with loan-to-value under 95% : 1.10 percent annual MIP
  • There is no “jumbo FHA mortgage premium” for loans made prior to April 1, 2012.


Special Cases: FHA Streamline Refinance MIPs

As part of the FHA’s announcement, there was also reference to the FHA’s benchmark refinance program, the FHA Streamline Refinance.

The FHA suggested that a subset of households using the streamline refi program will get access to lower mortgage insurance premiums after refinancing — not higher.

No official announcement has been made, but it’s believed that mortgage insurance premiums — both upfront and annual — will be dramatically lowered for FHA Streamline Refinances used to replace an existing FHA mortgages originated prior to June 1, 2009. New FHA Streamline Refinances that replace loans originally originated after June 1, 2009 will still pay the new, standard FHA mortgage insurance rates listed above.

The June 1, 2009 deadline should sound familiar — it’s the same deadline for Fannie Mae and Freddie Mac’s HARP 2.0 program.

The FHA is expected to confirm new FHA Streamline Refinance mortgage insurance premiums within a few weeks.

Lock Your FHA Rate Before The Price Hike

The FHA will make a formal announcement on its new FHA premiums in the coming days. Some of the exact numbers at top may change slightly. However, the FHA has confirmed the April 1, 2012 rollout date.


If you’re planning to use the FHA for your next home mortgage, get your loan application started today. If you wait, you’ll be subject to the FHA’s new premiums.


Source – Dan Green  

Author’s note : This information is subject to final review by the FHA. It’s based on an initial FHA announcement made February 27, 2012. It’s unofficial until the FHA releases its mortgagee letter on the matter. 

Changes to FHA Mortgage Insurance Announced

Changes to FHA Mortgage Insurance Announced.

 

The changes that were initially announced to be effective for cases assigned on and after April and June 1st are now effective for cases assigned on and after April 9, 2012 and on and after June 11, 2012 for loan amounts that exceed $625,500. Additional information was also added regarding reduced up-front and annual premiums for certain FHA streamline refinances and applies for cases assigned on and after June 11, 2012.

Warning to all- HUD couldn’t have made it any more confusing for us. We will all be challenged in the coming months with making sure we have communications and systems in place to assure we are using the correct MI premiums as determined by case assignment date, loan term, loan type, loan amount and LTV. Below I have attempted to lay it out in as organized a fashion as I’ve been able to determine after uncrossing my eyes which crossed while reading through the Mortgagee Letter.

Up-Front MIP Increase
If the FHA case is assigned on and after 04/09/2012: UFMIP = 1.75% per Mortgagee Letter 2012-4
• If the FHA case is assigned 10/04/2010 – 04/08/2012: UFMIP = 1.00%

Annual MI Increases
If the FHA case is assigned on or after 04/09/2012 per Mortgagee Letter 2012-4
• > 15 yr Term: > 95% LTV = 1.25%
<=95% LTV = 1.20%
• < = 15 yr Term: > 90% LTV = .60%
>=79% LTV = .35%
• Single Family forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).


If the FHA case is assigned 04/18/2011 – 04/08/2012
• > 15 yr Term: > 95% LTV = 1.15%
<=95% LTV = 1.10%
• < = 15 yr Term: > 90% LTV = .50%
>=79% LTV = .25%
• Single Family forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).

If the FHA case is assigned on or after 06/11/2012 AND the base loan amount exceeds $625,500 Mortgagee Letter 2012-4:
• > 15 yr Term: > 95% LTV = 1.50%
<=95% LTV = 1.45%
• < = 15 yr Term: > 90% LTV = .85%
>=79% LTV = .60%
• Single Family forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).

Up-Front MIP Decreases for Certain FHA to FHA Streamline Refinances
If FHA case assignment is dated on and after 06/11/2012 and the current FHA loan being paid off was endorsed prior to 06/01/2009 per Case Query in FHA Connection, up-front MIP = .01% and annual MI = .55%.

FHA determined that these increases are necessary to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund. Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013. FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.