Major FHA Changes to Increase Borrower’s Cost

This information courtesy of Teri Evans at Premier Mortgage Group.

This week several major changes were announced at HUD that will have a direct impact on FHA borrowing costs.

If you have clients that are on the fence share this information with them. These changes go into effect on all new FHA case numbers generated on or after 4/1/12. You can read the formal press relesase from HUD here.
CHANGE #1
Annual mortgage insurance premium (MIP) is increasing by 0.10%.
For loans over $625,500, effective June 1st the increase is 0.35%.

CHANGE #2
Upfront premium (UFMIP) is increasing by 0.75%.
HUD will continue to allow this to be financed.

Here is a scenario to show you the effect the April 1st changes will have on borrower costs. I assumed a purchase price of $250,000 with 3.5% down.

Current FHA Fee New FHA Fee
on 4/1/12
Increase
Upfront MI $2,412.50 $4221.88 $1809.38
Monthly MI $231.20 $251.30 $20.10

BUT THERE IS GOOD NEWS TOO!
In addition to this, HUD also just announced it would be reducing premiums for FHA loans endorsed on or before May 31, 2009. This decrease in MI will make streamline refinances more easily available. Details are due in the next couple weeks.