Buyers looking to secure FHA financing may wish to take heed of changes coming into effect that will affect their monthly mortgage payment.
HUD has announced that it will reduce the up front mortgage insurance premium from 2.20% to 1.00%, while at the same time increasing the monthly premium from .055% to 0.85%% – 0.90% for loans with a maximum of 96.50% LTV (loan to value). The FHA Commissioner has the right to increase the monthly mortgage insurance premium to as much as 1.55% if necessary.
Meanwhile, the FHA is considering a reduction in seller paid closing cost assistance to the buyer from its current maximum of 6.00% of purchase price to 3.00% of purchase price. This change has not taken place, but industry experts predict it is likely to happen before years end.
With historically low interest rate and FHA changes that could make your payment higher, now may be a good time to put your home buying plans into action.
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HUD Pushes New MIP Changes to October
Aug 10, 2010 (www.hud.gov.com)
In a press release by Deputy Assistant Secretary Vicki Bott on the new MIP implementation:
“Last week, FHA Commissioner David H. Stevens announced plans for implementing FHA’s new mortgage insurance premium structure. As we work to publish a Mortgagee Letter, it is our intention to announce that based on industry feedback and our desire to have this change implemented successfully in the marketplace, FHA will make the premium fee changes on all new case numbers effective October 4, 2010. Over this past week, the industry responded with support of the new fee structure, but voiced strong concern about having system changes ready in time to meet the original September 7, 2010 deadline. Since these system changes impact regulatory disclosures, lenders expressed they must have the additional time to implement and test systems. FHA took this feedback seriously and has accommodated the need for additional time.”
Charles Kraus, Coldwell Banker Residential Brokerage
Annapolis Plaza Office, Annapolis, MD
Office: (410) 919-2642 Mobile: (443) 822-0700 Email: firstname.lastname@example.org