Homebuyers using an FHA mortgage product to purchase a home after April 18, 2011 will be subject to higher monthly Mortgage Insurance premiums mandated directly by the FHA. The up-front Mortgage Insurance premium will remain the same.
All loan applications that are assigned a case number on or after April 18, 2011 will be subject to a 25 basis point increase in their Annual Mortage Insurance Premiums, which are generally paid monthly by the homebuyer. The National Housing Act requires that the FHA maintains a financially sound Mutual Mortgage Insurance Fund (MMIF). They have the ability to change premiums in order to do so and have elected to increase premiums at this time to significantly strengthen the capital position of the MMIF. The change should have a small effect on individual borrowers.
Remember, the new rate is based on the date that the case number is assigned. To ensure that your case number is assigned prior to the change date, you will need to begin the buying process prior to that date. If purchasing a home, you will need to have an executed contract for the subject property by Friday, April 15th, 2011 in order for your lender to request a case number prior to the change date. Having a fully executed contract may take time, so plan accordingly. We recommend if you are purchasing that you begin working with a mortgage professional and a licensed Realtor within the next 20 days if you wish to avoid this FHA Mortgage Insurance premium increase. If you are refinancing, you should speak with a mortgage professional within the next 30 days and finalize your decision no later than Friday, April 15th to avoid the increase.
Here is an example of how much the new Mortgage Insurance premiums impact monthly outlays when comparing purchases made before and after April 18, 2011.
Prior to April 18, 2011 April 18, 2011 and after
Loan Amount $200,000 $200,000
Monthly MIP $ 150 $ 192
By obtaining your case number prior to April 18, 2011, you can save approximately $42 per month on a $200,000 loan amount. That equates to just over $500 per year. If you are in the market to purchase a home or plan to be in the near future, it is in your best interest to speak with someone soon if you wish to avoid this increase in premiums.
Always be sure to work with an experienced and knowledgeable loan professional when applying for your home loan so that you can get the best products and terms available to you. If you’d like more information or would like to set up a meeting with one of our loan officers, please email us at firstname.lastname@example.org. The loan officers at Mission Mortgage average over 15 years of experience and are ready to help you with your home loan needs.