February 14th, 2011 7:33 PM by Kathy Delbridge
HUD Announces INCREASE In the Annual Mortgage Insurance Premium
HUD announces in a mortgagee letter dated February 14, 2011 that they would be increasing the annual mortgage insurance premium by 25 bps ( basis points) that is collected on FHA loans.
Who does this affect and what does this really mean?
Overall, here's an estimated payment increase from where we are currently, based on the annual premiums as of October 4, 2010.
Purchase Price EST Payment Increase
$250,000 $50.00
$200,000 $40.00
Not that this has any bearing on immediate changes, but here's an example how much higher the mortgage insurance will be after 4/18/2011, compared to where they were Prior to October 4, 2010.
$250,000 $120.00
$175,000 $84.00
These new changes will become effective for all FHA case #'s assigned on or after April 18, 2011.
If you know someone who is looking at purchasing a home and intends to use FHA financing for their financing, make them aware of this. With rates expected to hit 5.5% this year and this increase as well, there is NO time to delay. Even if the overall payment ends up being $50 more each month, that is $3000 over the next 5 years. That's the average costs to paint your home.
And, if you know someone who has an FHA loan that needs to be refinanced, make them aware of this before these changes occur.
HUD has actually been authorized to increase this premium up another 40 bps ( basis points). That would be almost 3 TIMES the amount of the monthly MI a client paid prior to October 4, 2010.
I am just a phone call away at 678-773-0651 and can always be reached via email at 678-773-0651.
Kathy Delbridge, CMPS®