FHA Mortgage Insurance set to increase April 2012

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Yesterday, HUD announced they are going to increase the annual (paid monthly) and upfront mortgage insurance premium on FHA insured mortgages effective on new case numbers obtained April 1, 2012 April 9, 2012 and later.

As of today, the upfront mortgage insurance premium for FHA insured mortgages is 1% of the loan amount. Most borrowers elect to finance this into their FHA loan although it can be paid for as a closing cost instead of including it in the loan amount.  HUD will be increasing the upfront mortgage insurance premium from 1% to 1.75% on April 1, 2012 April 9, 2012.

FHA's annual mortgage insurance (paid monthly) is set to increase by 0.10% for standard FHA loan amounts and will increase an additional 0.35% for "FHA Jumbos will take place on June 1. The additional 0.10% increase is due to "The Temporary Payroll Tax Cut Continuation Act of 2011. HUD has elected to tack the additional 0.25% on the larger loan amounts.

In the greater Seattle area, FHA base loan amounts of $417,000 or lower will see the annual mortgage insurance increase by 0.10%.  Seattle's current high balance (or FHA jumbo) impacts loan amounts of $417,001 to $567,500 and these loans will have increased annual mortgage insurance premiums by 0.35%.

How does this impact an FHA borrower?

Today a Seattle area homebuyer using an FHA insured mortgage at $417,000 with a minimum down payment of 3.5% and excellent credit would have a PIMI principal, interest and mortgage insurance) of $2,346.78 based on a 30 year fixed with a rate of 3.750% (apr 4.544). Effective April 1, this scenario will have a PIMI of $2,395.73 assuming the same rate (apr 4.665).  An increase in total monthly mortgage payment of $48.95 for the same scenario!

Currently a Seattle homebuyer using an FHA mortgage at $567,500 with a minimum down payment of 3.5% and excellent credit would have a PIMI (principal, interest and mortgage insurance) payment of $3,193.76 based on current rates of 3.750% for 30 year fixed rate (apr 4.541). Effective June 1, this high balance FHA loan, assuming the same rate (apr 4.817), the payment increases to $3,377.61! An increase in total monthly mortgage payment of $183.85 for the very same scenario!

NOTE: Rates quoted above are effective as of 2/28/2012 at 4:00 pm. If you would like me to provide you with a mortgage rate quote for your home located in Washington, click here.

If you are considering an FHA insured mortgage, whether it's for purchasing a home, FHA streamlined refinance or other refinance, you'll want to take action before the increased rates take effect. FHA case numbers are issued when you have a bona fide loan application (transaction) with a mortgage originator. I'm happy to help you if your home is located anywhere in Washington state.  UPDATE 3/6/2012: If your FHA mortgage was originated prior to June 1, 2009, you may qualifed for reduced FHA mortgage insurance.

If you would like a rate quote for an FHA mortgage on a home located in Washington, click here.

An official Mortgagee Letter is expected to follow soon. Don't wait!

Click here for FHA Loan Limits in Washington 

UPDATE 3/6/2012: It's official: Here's information about HUD's Mortgagee Letter.

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