Earlier this month, FHA mortgage insurance premiums (both annual and upfront) were dramatically increased for purchases and refinances with exception to *some* FHA streamline refinances. If you were preapproved with an FHA insured mortgage prior to April, you should check with your mortgage professional to make sure your preapproval is still valid with the increased mortgage payment. Remember, it’s your mortgage payment (debt to income ratio) and down payment that determines how much home you qualify for.
Upfront mortgage insurance premiums (typically financed) has been increased to 1.75% of the base loan amount.
Annual mortgage insurance for FHA loans with terms greater than 15 years (30 year fixed and adjustable rates) are now 1.2% of the base loan amount if your loan to value is 95% or lower; if your loan to value is greater than 95%, the annual mortgage insurance premium is 1.25% of the base loan amount.
For a 15 year fixed rate FHA mortgage, if your loan to value is 90% to 78.01%, the annual mortgage insurance premium is 0.35% of the base loan amount; loan to values over 90% will have annual mortgage insurance rates of 0.60%. NOTE: If you have a 15 year fixed FHA mortgage and your loan to value is 78% or lower, there is no annual mortgage insurance required.
If you have what’s considered an FHA “high balance” mortgage, which in the Seattle area, would be a base loan amount of $417,001 to $567,500 for a single family dwelling, annual mortgage insurance premiums are set to go up again effective on case numbers issued June 11, 2012 or later. HUD is scheduled to increase annual mortgage insurance premiums for FHA Jumbos/High Balance loans by an additional 0.25%.
Annual mortgage insurance is paid in your monthly mortgage payment. To determine how much your annual mortgage insurance premium will be, multiply the percentage reference above by your base loan amount and divide by 12.
**So how about those lucky folks I referenced above who may qualify for reduced FHA premiums? HUD is dramatically reducing mortgage insurance premiums for FHA streamlined refinances IF the FHA loan was endorsed by HUD before June 1, 2009. “Endorsed” is different than when your loan closed – it’s when HUD insured the FHA loan. This process often takes place several weeks AFTER the mortgage has closed – you may have closed your refinance on April 30, 2009 and if HUD endorsed it on June 1, 2009 (or later) you won’t qualify for the reduced rate.
Those who qualify will benefit from seeing their upfront mortgage insurance premium reduced to 0.01% and annual mortgage insurance reduced to 0.55%. This is effective on FHA case numbers issued June 11, 2012 or later. The good news is that you don’t have to wait to lock in your rate if your FHA loan qualifies for the reduced rate – you can start your application now! Your local mortgage originator can probably help you determine when HUD endorsed your FHA insured loan – I’m happy to help if your home is located anywhere in Washington state.