If you have been waiting for Congress to pass HARP 3.0 or have been previously turned down for a refinance because of lost equity in your home, you might consider trying to refinance again.
Borrowers not wanting to have FHA mortgage insurance as part of their mortgage payment for the life of the loan have about thirty days to take action. This shouldn’t be a reason to panic.
Effective FHA case numbers issued June 3, 2013 and later, FHA mortgage insurance will become a permanent part of the FHA mortgage payment.
Why do I say “SO WHAT?”
I’m pricing out a scenario for a first time home buyer who’s looking at buying a home priced at $250,000 and they have roughly 3% set aside for down payment plus closing cost. Since they have excellent credit, they are leaning towards conventional financing instead of FHA, which has much more expensive mortgage insurance (upfront and monthly).
The three scenarios quoted on this post are based on rates as of April 18, 2013 at 4:30 pm. Mortgage rates change constantly so if you would like me to provide you with a rate quote for your home located anywhere in Washington, click here.
Conventional mortgage “standard” (no special program) 30 year fixed with a loan amount of $242,500.
3.625% (apr 4.467%)… say, why is the apr so high? That’s because the pmi payments is factored into the apr. We also factor the appraisal cost, which most lenders do not. Net closing cost with rebate pricing is $2360 plus prepaids and reserves (taxes/insurance) leaves funds for closing estimated at $12,400.
Principal and interest payment is $1,105.92 plus mortgage insurance of $232.40 = $1338.32 (also referred to as the “PIMI” payment). Total payment with estimated taxes and insurance is $1643.74 (also referred to as PITI).
Home Advantage program with down payment assistance (second mortgage with zero interest and payments deferred for 30 years). This program does require home buyers to attend a WSHFC approved class. 30 year fixed with a loan amount of $240,500.
4.250% (apr 4.604%). Closing cost are estimated at $6218 (not including prepaids and reserves). With estimated taxes and insurance and credit for the second mortgage of $9,620 (4% of the loan amount) for down payment assistance, the total estimated funds for closing are $8,414.
The P&I is $1,191.00 plus monthly mortgage insurance at $24.23 = $1,215.23 (PIMI). Total payment (PITI). with estimated taxes and insurance is $1521.64
Fannie Mae HomePath program is only available to designated properties owned by Fannie Mae. No appraisal is required and there is no borrower paid mortgage insurance with credit scores over 660.
4.375% (apr 4.456%). Closing cost are estimated at $2323 after rebate pricing plus prepaids and reserves with funds due at closing estimated at $12,451.
The P&I is $1210.77 and there is no mortgage insurance. Total monthly mortgage payment (PITI) is estimated at $1516.19.
The programs listed above are not limited to first time home buyers. Which program is right for you depends on your personal financial situation and goals. It’s important to review your options and to make an educated decision.
If I can help you with your home purchase or refinance on your home located in Washington state, I’m happy to help you!
Mortgage rates continue to remain at historically low levels. Homeowners who have not recently refinanced may want to contact their mortgage professional to see if they can reduce how much they’re paying on interest.
Something that’s not staying low in the Seattle/King County area is home prices. The Seattle Times reports that in March, home prices are up 20% year over year. The median price for a home sold last month in Seattle jumped to $462,375. This is largely due to a lack of inventory. If you’ve been considering selling your home, now may be a good time.
Here are some of the economic indicators scheduled to be released this week:
Wednesday, April 10: FOMC Minutes
Thursday, April 11: Initial Jobless Claims
Friday, April 12: Retail Sales; Producer Price Index (PPI); Consumer Sentiment Index (UoM)
Also important to note: there has been some confusion as to the recent changes to mortgage insurance premiums on FHA loans regarding when the coverage terminates. FHA mortgage insurance will not become permanent until June 2013 and impacts newly originated FHA loans only with case numbers issued after May 31, 2013.
If I can help you with your home purchase or refinance for your home located anywhere in Washington state, please contact me. Have a great week!
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.
HUD has scheduled another increase to FHA annual mortgage insurance premiums effective with new case numbers obtained April 1, 2013 and later. FHA’a annual mortgage insurance premiums are paid monthly and are set to rise by 10 basis points.
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.
NOTE: Home owners who currently have FHA insured mortgages for their primary or investment properties and who had those mortgages guaranteed by FHA prior to June 1, 2009 will still qualify for reduced mortgage insurance premiums with FHA streamlined refinances. If you’re not one of these lucky home owners, you may want to take action now!
In addition, with new FHA loans as of June 3, 2013, FHA mortgage insurance will remain on the life of the loan. The only way to terminate it is to refinance out of an FHA loan or pay the loan off. Currently, FHA annual mortgage insurance is set to drop off the loan after it reaches a 78% loan to value and a minimum of 60 mortgage payments have been made. However with a minimum down payment scenario, it often takes closer to nine years before the loan to value reaches 78%. I would bet that many Washington home owners either refinance or sell their homes before their mortgage insurance drops off. Regardless, if you want to avoid having to pay FHA mortgage insurance for the life of that FHA insured mortgage, you’ll need to have your FHA case number prior to June 3, 2013.
What can you do?
If you want to avoid having a higher mortgage payment and you’re considering an FHA loan for your refinance or home purchase, you have a short window of opportunity to secure your lower payment now. An FHA Case number is not your application date. It is actually obtained shortly after you have a bona fide transaction and application. As we near the April 1 date, if you have a new FHA mortgage in process, you will want to confirm with your mortgage professional that your FHA case number has been secured. (They can provide you your FHA case number as proof).
I have been helping people with FHA insured mortgages since April 2000 at Mortgage Master Service Corporation. If you would like me to provide you with a rate quote for your home located anywhere in Washington State, click here.
I’ve been writing about pending changes to FHA insured mortgage loans regarding the mortgage insurance premiums. Yesterday, HUD issued Mortgagee Letter 2013-04 which makes the proposed changes “official”.
We’ve been anticipating changes to how long mortgage insurance will remain on an FHA insured loan as well as increases to FHA’s mortgage insurance premiums.
It’s no surprise that FHA will increase annual mortgage insurance premiums (paid monthly). The first increase goes into effect with case numbers issued April 1, 2013 and later.
- 30 year fixed with loan to values of 95% or lower will increase to 130 bps (from 120)
- 30 year fixed with loan to values greater than 95% will increase to 135 bps (from 125)
- 30 year fixed FHA Jumbos with loan to values of 95% or lower will increase to 150 bps (from 145)
- 30 year fixed FHA Jumbos with loan to values greater than 95% will increase to 155 bps (from 150)
- 15 year fixed with loan to value of 78.01% – 90% will increase to 45 bps (from 35)
- 15 year fixed with loan to values greater than 90% will increase to 70 bps (from 60)
- 15 year fixed FHA Jumbos with loan to values of 78.01% – 90% will increase to 70 bps (from 60)
- 15 year fixed FHA Jumbos with loan to values greater than 90% will increase to 95 bps (from 85)
NOTE: in the Seattle – King County area, FHA jumbos are loan amounts from $417,001 to $567,500.
But wait… there’s more!!
Effective on case numbers issued June 3, 2013 and later, 15 year fixed FHA mortgages with a loan to value of 78% or lower will have annual mortgage insurance of 45 bps. Currently these loans have zero annual mortgage insurance.
Want to save on your FHA mortgage insurance? Act quickly!! Click here for a mortgage rate quote for homes located anywhere in Washington state.
FHA streamlined refi’s where the current FHA mortgage was endorsed prior to June 1, 2009 are exempt from this adjustment. These loans still qualify for reduced mortgage insurance premiums.
Per the mortgagee letter, this will be effective on case numbers issued June 3, 2013 and later, FHA insured mortgages will change when mortgage insurance can be terminated. Most FHA loans will have mortgage insurance for the term of the mortgage for loans with case numbers issued June 3, 2013 and later.
Here is a chart from HUD comparing “previous” (in effect now until the new regulation) and “new” (in effect with case numbers issued June 3, 2013 and later).
If you are considering an FHA insured mortgage and would like to have mortgage insurance that one day drops from your mortgage payment – you have a couple months left to do so. The FHA Case number is typically (but not always) ordered at application.
I am happy to help you with your FHA purchase or refinance on your home located anywhere in Washington state. I have been originating mortgages at Mortgage Master Service Corporation since April 2000, including FHA loans.