FHA loan changes and what they mean for you
The Federal Housing Administration is going to make some changes to the FHA loan. These changes will take effect on October 4, 2010. The two aspects of the FHA loan that are changing are the Initial Mortgage Insurance Premium (UFMIP) and the Mortgage Insurance Premium (MIP) that is charged to borrowers on a monthly basis.
The UFMIP is actually going to be reduced from 2.25% to 1%. This fee is taken and placed in an escrow account with the US Treasury and distributed to HUD on a monthly basis in the event the borrower defaults on their loan.
The MIP will be raised from 55% of the loan amount per year to 85% of the loan amount per year. So what does this mean for you? Well, every situation is unique, so it’s important to speak with a home loan expert to ensure you get the most accurate information for your situation. Your down payment and loan-to-value ratio will determine what your MIP payment will be. However, for a $200,000 loan, borrowers can expect to pay about $60 more per month after the new changes take effect.
With mortgage rates currently at record lows and changes and additional fees on the horizon, now is the time to complete that home refinance you’ve been thinking about or make your home purchase. Don’t pay a dime more than you should in today’s market. Contact a trusted mortgage professional to see if an FHA loan is right for you.
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