Get Your Applications In : FHA Mortgage Insurance Premiums Rising 0.25 Percent April 18, 2011

September 23, 2011 at 2:10 pm Leave a comment

FHA Mortgage Insurance Changes

After this week ends, the FHA is raising mortgage insurance premiums on its new Okemos borrowers. It’s the FHA’s third such increase in the last 12 months.

Beginning with FHA Case Numbers assigned April 18, 2011, mortgage insurance premiums will be higher by 25 basis points per year, or 0.25%.

Against a $200,000 loan size, the MIP increase adds $500 to an FHA-insured borrower’s annual cost of homeownership. All new FHA loans are subject to the increase — purchases and refinances.

Existing FHA-insured homeowners across Michigan are unaffected. Premiums do not rise for loans already made.

The FHA is increasing its mortgage insurance rates because, as a group, the FHA is insuring a much larger percentage of the U.S. housing market. 

In 2006, the FHA held a 4 percent market share. By 2010, that share ballooned to 19 percent and, today, it’s estimated to be even higher.

In its official statement, the FHA says that the quarter-point MIP bump will “significantly strengthen” its reserves which are depleted because of delinquencies and defaults. By law, the FHA’s capital reserves must meet certain levels. 

Therefore, to meet these requirements, the FHA is rolling out its new mortgage insurance premium schedule:

  • 15-year loan term, loan-to-value > 90% : 0.50% MIP per year
  • 15-year loan term, loan-to-value <= 90% : 0.25% MIP per year
  • 30-year loan term, loan-to-value > 95% : 1.15% MIP per year
  • 30-year loan term, loan-to-value <= 95% : 1.10% MIP per year

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

The FHA also charges a 1 percent, up-front mortgage insurance premium at closing. That figure remains unchanged.

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Entry filed under: FHA, MIP, Mortgage Insurance Premium.

What’s Ahead For Mortgage Rates This Week : April 11, 2011 What’s Ahead For Mortgage Rates This Week : April 25, 2011

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Don Grimes

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Don Grimes
"Your Residential Mortgage Specialists"
Senior Mortgage Loan Officer
NMLS: #130686

Michigan Mutual, Inc
Office: (517) 507-0151
Toll Free: (800) 521-1642
Mobile: (517) 927-8110
don@DonGrimes.com
www.DonGrimes.com

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