Planning to use an FHA-backed mortgage for your next home loan? You might want to get your application in gear today.

Beginning next week, the Federal Housing Administration (FHA) is changing the way it charges mortgage insurance to U.S. homeowners. For the fourth time since 2010, FHA mortgage insurance premiums are rising for all FHA-backed homeowners.

For FHA Case Numbers assigned on, or after, Monday, April 9, 2012, there are two planned changes.

First, FHA Upfront Mortgage Insurance Premiums (UFMIP) will increase by 75 basis points to 1.75%, or $1,750 per $100,000 borrowed. Upfront Mortgage Insurance Premium is paid at closing, and typically added to an FHA borrower’s loan size.

The current UFMIP rate is 1.000 percent.

Second, annual FHA mortgage insurance premiums are rising. All new FHA-backed loans will be subject to a 10 basis point increase in annual mortgage insurance premiums, costing homeowners an extra $100 per $100,000 borrowed per year.

The new FHA annual mortgage insurance premium schedule follows :

• 15-year loan term, loan-to-value > 90% : 0.60% MIP per year
• 15-year loan term, loan-to-value <= 90% : 0.35% MIP per year
• 15-year loan term, loan-to-value <= 78% : 0.00% MIP per year
• 30-year loan term, loan-to-value > 95% : 1.25% MIP per year
• 30-year loan term, loan-to-value <= 95% : 1.20% MIP per year

In addition, for loans above $625,500, beginning with FHA Case Numbers assigned on, or after, June 11, 2012, there will be an additional 25 basis point increase in annual MIP.

To calculate your monthly MIP obligation as a FHA homeowners, multiply your starting loan size by your insurance rate from the list above, then divide by 12.

Note that the FHA mortgage insurance changes apply to new FHA Case Numbers only. If you have an FHA mortgage approval in-process, or an existing FHA home loan, you are not subject to the new MIP schedule. To avoid paying the FHA’s new MIP schedule, therefore, begin your FHA mortgage application today.

Once your FHA Case Number is assigned, you’re locked in to today’s lower premiums.

The FHA is making more changes to its flagship FHA Streamline Refinance program.

Beginning mid-June 2012, certain current, FHA-backed homeowners will be able to refinance their existing FHA mortgage into a new one, without having to pay the government-backed group’s new, costly mortgage insurance premium schedule.

Earlier this week, the FHA rolled out its new MIP schedule.

Beginning April 9, 2012, new FHA mortgages are subject to a 1.75% upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium of up to 1.25% for loan sizes up to, and including, $625,500; or 1.60% for loan sizes exceeding $625,500.

Upfront MIP is typically added to the loan size as a lump sum. Annual MIP is paid via 12 monthly installments. Both add to the long-term costs of homeownership.

However, the FHA’s new MIP schedules will not apply to all FHA-backed homeowners equally. Homeowners whose FHA mortgages were endorsed prior to June 1, 2009 will benefit from a different, less costly MIP schedule.

For these homeowners in search of a streamline, the MIP schedule is as follows :

• Upfront MIP : 0.01% of the loan size
• Annual MIP : 0.55% of the loan size, with no adjuster for loan sizes over $625,500

The new schedule is detailed in FHA Mortgagee Letter 12-04 and it lowers the cost of FHA Streamline Refinancing for long-time, FHA-backed households in Texas and nationwide to almost nothing.

As a real-life example, an FHA-backed homeowner whose $100,000 mortgage dates to 2008 could refinance via the FHA Streamline Refinance program and pay just $10 in upfront MIP, with a corresponding annual MIP payment of just $550, or $45.83 monthly. 

By comparison, every other FHA-backed homeowner with a $100,000 mortgage pays $1,750 in UFMIP and as much as $1,600 in annual MIP.

The new streamline refinance MIP schedule is in effect for FHA mortgage applications with case numbers assigned on, or after, June 11, 2012. It is not available for loan applications made prior to that date.

There are lots of dates and deadlines in the FHA’s new streamline program. If you’re too early — or too late —  you could miss your optimal refinance window. Talk with your loan officer, therefore, and put a plan in place. You’ll be glad to be prepared.  

Beginning April 1, 2012, the FHA is once again raising mortgage insurance premiums (MIP) on its newly-insured borrowers throughout Houston and the country.

It’s the FHA’s fourth such increase in the last two years.

Beginning April 1, 2012, upfront mortgage insurance premiums will be higher by 75 basis points, or 0.75%; and annual mortgage insurance premiums will be higher by 10 basis points per year, or 0.10%.

For borrowers with a loan size of $200,000, the new MIP will add $1,500 in one-time loan costs, plus an on-going, annual $200 increase in total mortgage insurance premiums paid.

All new FHA loans are subject to the increase — purchases and refinances.

The FHA is increasing its mortgage insurance premiums because, as an entity, the FHA is insuring a much larger percentage of the U.S. mortgage market than ever before. 

In 2006, the FHA insured 2 percent of all purchase-money mortgages. In 2011, that figure jumped to 18 percent. Unfortunately, as the FHA has insured more loans, it’s number of loans in default have climbed, too, forcing the FHA to boost its reserves.

Beginning April 1, 2012, the new FHA annual mortgage insurance premium schedule is as follows :

• 15-year loan term, loan-to-value > 90% : 0.60% MIP per year
• 15-year loan term, loan-to-value <= 90% : 0.35% MIP per year
• 30-year loan term, loan-to-value > 95% : 1.25% MIP per year
• 30-year loan term, loan-to-value <= 95% : 1.20% MIP per year

In order to calculate what your FHA annual mortgage insurance premium would be on a monthly basis, multiply your beginning loan size by your insurance premium in the chart above, then divide by 12.

In addition, for loans over $625,500, beginning June 1, 2012, there is an additional 25 basis point increase to annual MIP.

To avoid paying the new FHA mortgage insurance premiums, start your FHA mortgage application today. Existing FHA-insured homeowners will not be affected by the change.

Mortgage insurance premiums will not rise for loans already made.

Starting Monday, April 5, 2010, getting an FHA mortgage in Houston and nationwide will be more expensive for borrowers.

In new guidelines set forth earlier this year, the FHA announced plans to raise additional revenue and reduce the overall risk of its mortgage portfolio.

The changes include the following:

1. Increase Upfront Mortgage Insurance Premiums from 1.75% to 2.25% for everyone
2. A plan to reduce seller concessions from 6 percent to 3 percent
3. An increase in minimum downpayment for FICOs 580 or lower

For your own loan, to avoid being subject to higher loan costs, make sure to have your FHA Case Number assigned prior to Monday, April 5, 2010.  That means you’ll want to give a full mortgage application before the weekend so your lender can register your loan in time for the deadline.

But don’t leave your application to the last minute.

Friday is Good Friday so most banks will be closed. Your true FHA deadline, therefore, is Thursday April 1.

Also worth noting is that the FHA isn’t done with its changes.

In its policy statement, the group also announced its plans to petition Congress to raise monthly mortgage insurance premiums.  The FHA’s formal request, in summary:

1. Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month
2. Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing

For now, the request is neither approved nor acknowledged by Congress. It’s merely a request. And in the event that Congress does approves it, the FHA reserves the right to change its projections.  Either way, it means higher costs for consumers.

The best plan, therefore, is to get your FHA mortgage into underwriting ahead of the switches because borrowing money will be harder, and more costly.

FHA changes UFMIP to 2.25% and Down Payments are being increased!

If you recall, I have been writing about my outlook on FHA changes for a while now, and folks, I wasn’t that far off.

The Federal Housing Administration has been in some financial trouble due to other types of financing being unattractive, and because of all the rising defaults due to the job market, FHA’s tightening up.

Now this is going to take some time to get passed down through the funnel to the investors (banks/lenders), so I am not sure of when the changes will be effective, but take this a forewarning, and also, A HEAD START TO PREPARE. When it does go into effect, I will be the first to let you know.

In this morning’s mortgage bond market, we are up 16 bps and we’re hedged between both levels of resistance, as the FNMA 30 Year 4.5% coupon is currently being sold at $100.78.

Here are the results from today’s reports:

1. Producer Price Index (PPI)- 0.2%
2. Core Producer Price Index- 0.0%
3. ICSC-Goldman Store Sales- 2.0%
4. Housing Starts- 557K

Have a great day, and I’ll be back with any significant changes!

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Can you imagine being 2 weeks into the process and your part-time Loan Officer calling and saying, “Hi Bob… um, we have a little issue?”

In our information age, you need what you want, and you need it NOW- but not so fast, Charlie.

What we see (and later save), day in and day out, is inexperienced Loan Officers wanting to get the “deal” in faster than they can ask your name, only to realize that they forgot to ask you that one “deal-killer” of a question at the beginning, and now everyone is out of time, and money- but has plenty of frustration.

So to ease everyone’s minds, we are here to help and want you to know that we have our fingers on the markets, the economy, rates, and guidelines; but most importantly, we are here to GIVE YOU CORRECT AND INFORMED ADVICE ON ALL FHA LOANS.

So with that being said, here’s the scoop on the new change in FHA guidelines:

As of October 1, 2008, all Up Front Mortgage Insurance Premiums (UFMIP) for purchases and full-credit qualifying refinances will be 1.75%.

For streamline refinances, UFMIP will be 1.50%.

For all FHASecure, you are looking at 3%.

As for the MONTHLY mortgage insurance premiums, as they have had some slight changes as well, but nothing too major.

Here is the link directly to HUD Memo detailing these changes:

FHA GUIDELINE CHANGES

As always, we’re here to help and welcome any questions you may have!