Posts Tagged ‘mortgage insurance’
HUD has issued Mortgagee Letter 2010-28 changing the Upfront and Annual Mortgage Insurance Premiums effective with case numbers assigned on or after October 4, 2010 as follows:
Upfront Premiums
| Loan Type | Upfront Premium Requirement |
| Purchase & Full Credit Qualifying Refinances | 100 BPS |
| Streamline Refinances (all types) | 100 BPS |
Annual Premiums
| LTV | Annual Premiums for Terms >15 Years |
| = or <95% | 85 BPS |
| >95% | 90 BPS |
| LTV | Annual Premiums for Terms =or <15 Years |
| = or <90% | None |
| >90% | 25 BPS |
These premiums are effective with case numbers assigned on or after October 4, 2010.
Community Outreach Leader and Licensed Loan Officer NMLS ID 208452 - office address 2300 Windy Ridge, Atlanta GA, 30339— Ken Cook NMLS ID 208452
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The cause for celebration over Federal Housing Administration lowering the upfront mortgage insurance premium is short lived. Concurrent to lowering the upfront fee is the increase of the monthly insurance premium fee.
Lowering the UFMIP from 2.25% to 1% will certainly decrease the amount of repayment. However, increasing the MIP from .55% to .90% (on loans with a down payment of 5% or less) will increase the cost of repayment significantly. The end result will be the FHA having more operating capital if the result is not a significant decrease in the number of sales due to borrowers not being able to qualify on debt-to-income ratios.
Currently, if you are purchasing a home at $200,000 (for example) with the FHA minimum down payment of 3.5% your base loan amount, prior to the UFMIP add back, is $193,000. Adding back the UFMIP, at the current rate of 2.25%, brings the loan amount to $197,343. The MIP cost per month, at the current rate of .55%, is $90.45 per month.
After October 4th 2010 the UFMIP will be only 1% meaning the loan amount including UFMIP will be $194,930 – a savings of $2413 on the purchase price. However with the new MIP rate of .90% the monthly MIP addition to the payment will be $130 – resulting in a payment approximately $40 per month higher. At that rate the savings on UFMIP ($1900) will be lost in about 4 years.
One plus is that, at least currently, MIP does have a tax benefit and the buyer should consult their tax preparer for detailed information on the tax benefits of a monthly mortgage insurance premium.
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— Ken Cook NMLS ID 208452
For many years the Up Front Mortgage Insurance Premium, established and priced by the Federal Housing Administration, has been at 1.75% of the loan amount on purchases and non-streamlined refinances. Due to increased costs and losses in the Administration a new level for the UFMIP has been established and will go into affect on April 5, 2010.
The UFMIP is not the same as the Monthly Mortgage Insurance Premium but rather is paid in full at the time of consummation of the loan. In other words the date the final loan documents are paid and monies exchange hands. Read the rest of this entry »
— Ken Cook NMLS ID 208452
— Ken Cook NMLS ID 208452