I just got done reading the release from HUD about risk based mortgage insurance premiums and wanted to share with you. For the first time in it’s history FHA will make changes to the mortgage insurance policy they have long since used. Due to the overwhelming number of borrowers coming to FHA for financing with the subprime fallout, HUD has reassessed the mortgage insurance policy and will make changes effective on all case number issued on or after July 14, 2008. This doesn’t mean that if you make your application on that date, rather if your loan officer gets your case number assigned on or after that date. The case number is FHA’s tracking mechanism for all of it’s mortgages and usually starts with a 052 number.
The changes are being implemented after HUD’s 90 comment period on the proposed changes. In an effort to serve more people and help them get FHA loans, HUD will make the proposed changes in order to help ensure the financial soundness of FHA mortgage programs.
Some of the highlights include:
- A first time homebuyer with HUD approved counseling will pay only 200 basis points (2%) for the upfront mortgage insurance premium.
- All borrowers with a >95% loan-to-value will pay .55 to the annual premium (this is the one added to your monthly payment)
- Borrowers who take out a 15 year and have a 90% LTV or less mortgage will pay 1% upfront mortgage insurance (which is reduced by .5%) if their decision FICO scores are above a 640.
- Streamline refinance borrowers will pay a reduced upfront mortgage insurance of 1% (down from 1.5%) and the same annual they are paying now. (so if you have a $200K loan your upfront mortgage insurance will be $2,000 instead of $3,000) this will result in a $7 reduction in payment.
The overall matrix will change and will be more risk based in an effort to assist more homeowners and make it more affordable for homeowners who have good credit and lower loan to values.
If you have a specific scenario or question shoot me an email.
Ray
