Wednesday, March 9, 2011

FHA changes MI Premiums... again!

Last year I remember an almost daily reminder to my real estate agent contacts that the FHA upfront premium was increasing to upwards of 2.25%. This increase lasted for all but six months or so before it was adjusted back down to 1% if you were over 95% loan to value however the monthly mortgage premiums were increased to as much as .90% at the same time. HUD is again implementing changes to help stabilize the FHA program which gained popularity as the mortgage meltdown led to the abomination of the 80/20 programs and like.

The new increase of .25% will be effective on all FHA loans with a case number assigned on or after April 18th, 2011. Pushing the monthly mortgage insurance to a whopping 1.15% when putting less than 5% down or 1.10% with a down payment of 5% or more.

With that said time is again running out for prospective home buyers to keep a little extra cash in their pockets. This FHA change coupled with an increased lender fees to counteract the increase in admin costs to adhere with the newer GFE (good faith estimate) and the upcoming changes to loan officer compensation will undoubtedly hurt the average consumer's bottom line.