I've written about the upcoming changes to FHA's upfront and annual mortgage insurance premiums which is effective on all case numbers obtained October 4, 2010 and later. This impacts both purchases and refinances. If you're considering utilizing FHA for a refinance and you're going to retain your home for more than four years, you may want to consider taking now.
Here's a comparison between the two mortgage insurance scenarios based on an FHA streamline refinance with no appraisal based on the current 30 year fixed rate of 4.250% (apr 5.013) as of today, Sept. 24, 2010, at 12:30 p.m. with a $528,695 base loan amount:
FHA mortgage insurance with FHA case number issued by October 1, 2010 or earlier:
Upfront Mortgage Insurance Premium of 2.25% = $11,895.00
Base loan amount of $528,695 plus $11,895 (most borrowers finance the ufmip) = $540,590. Amoritzed for 30 years at 4.25% provides a principal and interest payment of $2,659.38.
Annual mortgage insurance premium of 0.55% of the base loan amount ($2907.82) divided by 12 months = $240.46.
$2,659.35 plus $240.46 = $2,899.91 principal, interest and mortgage insurance payment.
FHA mortgage insurance with case numbers issued October 4, 2010 or later:
Upfront mortgage insurance premium of 1.00% = $5,286, creating a total loan amount of $533,981. Amortized for 30 years at 4.35% provides a principal and interest payment of $2,626.87.
Annual mortgage insurance premium of 0.90% of the base loan amount ($4758.26) divided by 12 months = $393.48.
$2,626.87 plus $393.48 = $3,020.35 principal, interest and mortgage insurance payment.
THIS IS AN INCREASE IN PAYMENT OF $120.44 PER MONTH IF WAITING UNTIL OCTOBER TO OBTAIN YOUR FHA CASE NUMBER.
What can you do if you're considering an FHA loan? If you're "tight" on qualifying with your debt-to-income ratios, you may want take action PRIOR TO OCTOBER. Obtaining an FHA case number has nothing to do with when you take your application or lock in your rate.
If you are interested in an FHA purchase, refinance or streamline refi and your home is located in Washington state, I am happy to help you! Mortgage Master Service Corporation is a Direct Endorsed, HUD approved FHA lender and I've been originating FHA loans for over 10 years. Just click on the apply tab above or send me an email!
PS: Many home owners who currently have an FHA mortgage are able to take advantage of today's low interest rates with an FHA streamline refi without an appraisal.