There are some changes coming up in
FHA that you should know about. As you may or may not be aware, FHA has
implemented numerous increases to their monthly MI and the Up Front MIP since
2009. They are doing it again and so FHA continues to be the "loan
of last resort". Since the increases started, my lenders have been
consistently avoiding FHA for borrowers who have other options, since it is
more expensive. FHA is notorious for changing this stuff at the last
minute, but for now here is what we expect...
(There are some slight variations to
the bullet points below for 15 year FHA loans or if clients put more than 5%
down, but that is a VERY small percentage of FHA borrowers, so these are the
changes most borrowers will experience)
- The monthly MI will increase to 1.35% of the loan amount (divided by 12) for most FHA loans. So a $200,000 30 year fixed FHA loan will have monthly MI of $225.00 (about double conventional) - This will be effective with all FHA case numbers pulled after April 1, 2013
- The Monthly MI will not be able to be dropped under any circumstances for the life of the loan. It doesn't matter if they pay the loan down or if the home doubles in value, borrowers will still have to pay monthly MI until they sell, refinance, or pay the loan off. This will be effective for all FHA case numbers pulled after June 3rd, 2013.
The Up Front MIP will remain the same at 1.75% of the loan amount and is still non refundable for any reason.
Information compliments of one of my favorite lenders, Mark Moore. Thanks, Mark!
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