FHA Annual MIP & Up-Front MIP changes April 2012
HUD has issued Mortgagee Letter 12-4 announcing changes to the FHA Single Family Annual Mortgage Insurance Premium (Annual MIP) and Up-front Mortgage Insurance Premium (UFMIP). If you don’t want to read the detailed guidelines below the bottom line is that it is going to cost you more to get an FHA loan to buy a home.
So what does this mean? Here is a simple way to look at it. The above increases will impact all newly originated FHA mortgages for purchase and refinances, unless the home owner qualifies for the new reduced mortgage insurance rates with an FHA streamlined refinance. The cost of getting an FHA loan just increased again for what seems like the umpteenth time since 2010. According to FHA, “the monthly payment for an average loan…will increase by approximately $30.” For people living paycheck to paycheck, $30 is significant. Looked at another way, for every $25,000 in a person’s loan, the monthly payment will increase $5.21. A potential homeowner applying for a $200,000 FHA mortgage will now pay roughly $42 more per month. If you are currently searching for a home and pre-approved for an FHA mortgage, it is time to go back to your loan officer and make sure this increase does not affect your pre-approval. If your loan officer is unaware of this change or you don’t have a loan officer, I highly recommend you read “How To Pick Your Lender” Then call me!
If you want the exact details, check them out here:
1st Part – The Monthly MIP:
Annual MIP increasing by 10 bps (basis points)
· Loan amounts ≤ $625,500
· Mortgages with terms ≤15 years and LTV ≤78% remain exempt from the Annual MIP (ML 11-35)
· Effective date: Case number assignment date April 9, 2012
Annual MIP increasing by 25 bps
· Loan amounts > $625,500
· Mortgages with terms ≤15 years and LTV ≤78% remain exempt from the Annual MIP (ML 11-35)
· Effective date: Case number assignment date June 11, 2012
Annual MIP decreasing to 55 bps – Streamline Refinances
Effective date: Case number assignment date June 11, 2012
· Streamlined Refinances endorsed on or before May 31, 2009
· Endorsement date is on the Case Query screen in FHA Connection
2nd Part – The Upfront MIP:
UFMIP increasing to 1.75% of base loan amount
· Regardless of loan amount, term or LTV
· Currently the rate is 1% of the loan amount
· FHA will continue to permit financing of this charge into the mortgage and will continue to calculate actual premium changes against the base loan amount before adding any financed UFMIP
· Fortunately, the upfront MIP can be financed and amortized over the life of the loan.
· Effective date: Case number assignment date April 9, 2012
UFMIP decreasing to 0.01% - Streamline Refinances
Effective Date: Case number assignment date June 11, 2012
· Streamlined Refinances endorsed on or before May 31, 2009
· Endorsement date is on the Case Query screen in FHA Connection
If you are currently searching for a home and pre-approved for an FHA mortgage, it is time to go back to your loan officer and make sure this increase does not affect your pre-approval. If your loan officer is unaware of this change or you don’t have a loan officer, I highly recommend you read “How To Pick Your Lender” Then call me!
About the Author
Shawn Kaplan is an active, 50 state Licensed loan officer with Access National Mortgage. Email Shawn at skaplan@accessnational.com or call 615-426-3182.
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