Yesterday, HUD (Department of Housing and Urban Development) has announced their intention to lower the Up Front MIP from 2.25% to 1% AND ( GOOD NEWS) and
Increase the Annual (monthly) MIP (Mortgage Insurance Premium) from .50 - .55% to .85 - .90% depending on LTV (BAD NEWS) on loan terms greater than 15 years.
This is scheduled to be effective for case numbers issued starting September 7, 2010 - pending being signed by our president.
The results of this FHA change is:
$100,000 base loan
Loan Amount with Financed MIP
$101,000 using the new MIP in the mortgage amount
$102,250 using the old MIP in the mortgage amount
Annual MIP (Paid monthly on top of mortgage payment)
$909.00 ($75.75 Monthly) New Annual MIP based on $101,000
$562.38 ($46.86 Monthly) Old Annual MIP based on $102,250
At 5% 30 years assuming 96.5% LTV
A borrower will need an estimated $75-80 more in monthly income or $900 more per year to qualify per $100,000 in loan amount.
This is cutting edge news and a more formal announcement will follow, however if you are a home buyer considering FHA financing, you might want to keep that September 7th date in mind to save some $s.
Should you have any questions on the home buying process, give us a call at 626-629-8439 and if you have any FHA financing questions, give Mondie Pic'l at Fairway Mortgage a call. She can be reached at 626-233-1303.