There are just a few days left before FHA mortgages will have another increase to annual mortgage insurance premiums. Effective with case numbers issued April 1, 2013 and later, FHA annual mortgage insurance premiums will adjust an additional 10 bps to 15 bps.
While this may not sound like much, it does all add up and why not have a cheaper mortgage payment if it’s possible? For example, a base loan amount of $400,000 with a loan to value of 95% or lower, currently has a monthly mortgage insurance premium of $396.65 based on a rate of 1.20%. After the new mortgage insurance rates go into effect, this monthly premium will be $429.71 – an increase of $33.06 per month.
Home owners who have been planning on doing an FHA streamlined refinance should really considering starting their application NOW. Especially since FHA has “net tangible benefit” requirements that the new mortgage payment (PIMI) needs to be reduced by 5% or HUD will not permit the refi. The PIMI payment is principal, interest and mortgage insurance. Tacking on an additional 10 bps to the mortgage insurance and increasing the payment may make it more challenging for home owners to meet the “net tangible benefit” test.
Whether your are buying or refinancing your home during this time using an FHA insured mortgage, make sure your lender has obtained your FHA Case Number prior to April 1, 2013. This is obtained after you have submitted your complete application.
How can you make sure you have your FHA Case Number and reduced mortgage insurance premiums? It’s real simple – ask your Mortgage Originator to provide you with your new case number.
I have been originating FHA mortgages for homes located in Washington for 13 years at Mortgage Master Service Corporation. If I can help you with your FHA purchase or refinance, please contact me. Click here for a rate quote for your Washington home.