FHA Refinancing – FHA Loans – FHA Purchase – FHA Home Loans
Over the past week, Congress has taken quick action and passed H.R. 5981. The bill gives FHA the authority to adjust its annual mortgage insurance premium, yielding approximately $300 million per month in value to the FHA Mutual Mortgage Insurance Fund at a time when its reserves are perilously low. This will affect loans originated after September 7. Typically, any case numbers issued prior to Sept 7, would fall under current rules and case numbers issued on or after Sept 7 would use the new rules.
Once President Obama signs the bill, the UFMIP would drop from 2.25% to 1%. The maximum monthly MI on a loan above 95% would increase from .55% to 1.55%, but the target annual premium per below is .90%. In other words, they could charge as much as 1.55%, but most likely will be at .90% initially.
EXAMPLE
$100,000 loan amount
Current FHA New FHA
UFMIP $2250 UFMIP $1000
Monthly MI $45.83 Monthly MI $75 (.90%)
$129 (1.55%)
Although the reduction in the UFMIP should help reduce the number of loans affected by the high cost calculation, the increase in the monthly MI will affect qualifying and will cost the borrower more over time. If you are in the market to refinance, apply now before the change is made.
With this authority, FHA is in a better position to address the increased demands of the marketplace and return the MMI fund to congressionally mandated levels without disruption to the housing market.
