FHA Mortgage Insurance: April Fool Prank or Not
What do you think of when April 1st comes around?
Pranks would be the guess for most people but for the Federal Housing Administration (FHA) it’s time to increase the amount of their mortgage insurance premium which will affect all forward mortgages and that is no fooling.
What is changing?
An increase to the annual mortgage insurance which is paid monthly on FHA loans.
Why is it needed?
FHA insurance is needed to cover losses in case a loan defaults. In return FHA approved lenders can qualify your loan with more flexible guidelines.
When does it go into effect?
April 1st 2013
How much more is the increase?
The range will be from “.05 to .10“ basis points (BP) depending on the Loan size (under or above $625,500), Loan term (15 or 30 yrs) and Loan to Value (LTV – Down payment/Equity amount)
These changes in return are supposed to help keep the FHA programs going strong for now and into the future for all homebuyers and homeowner.
If you are now or will be using FHA financing including the 203k renovation loan and are interested in how this could affect you then contact your FHA Loan Officer/Lender for more details.
Next FHA mortgage insurance premium change on the horizon – June 3rd. 2013. More on that later so sign up for the free guide/ resources over at the 203K Mortgage Lender website.