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We May Be Seeing Lots More Conventional Loans Coming Down The Road
The FHA is an insurer of mortgage loans and, by law, it is required to maintain a 2% reserve in its Mutual Mortgage Insurance (MMI) fund. Currently, because of bad loans made last decade, the FHA's reserves are -1.44 percent.
In an effort to rebuild the MMI, therefore, the Federal Housing Administration has planned some changes -- chief among them, an increase in annual mortgage insurance premiums on most FHA-backed mortgages.
New MIP Begins April 1, 2013Beginning April 1, 2013, most FHA-backed mortgages will be subject to an MIP increase of 10 basis points annually, or 0.10 percentage points. The increase applies to all loan terms, including 15-year fixed-rate FHA loans.
In addition, insurance premiums for jumbo FHA loans will change, too.Loans with terms of 15 years or less, and balances between $625,500 and $729,750, will be subject to an increase of 10 basis points annually, or 0.10 percentage points. These loans are only available in designated "high cost" areas which include Orange County, California; Montgomery County, Maryland; and Eagle County, Colorado, among others.
Loans with terms of between fifteen and 30 years will be adjusted higher by 5 basis points annually, or 0.05 percentage points, to a the maximum 1.55% annual MIP rate as allowed by law.
The MIP increase will not affect FHA Streamline Refinances which replace FHA loans from before June 1, 2009.
New FHA MIP Cancelation Policy Begins June 3, 2013The Federal Housing Administration also made a second MIP-related announcement -- the agency is reversing its policy which allows FHA-backed homeowners to cancel mortgage insurance premiums once the outstanding principal balance of an FHA loan reaches 78 percent of the original balance.
Going forward, the FHA will disallow the removal of MIP throughout the life of a loan, if the loan's starting loan balance is higher than 90% of its appraise valued. This is true for purchases and refinances.For loans in which the loan-to-value begins at 90 percent or less, mortgage insurance premiums must be paid for 11 years. This change goes into effect June 3, 2013.
As the team leader for our group, my responsibility is to all of our clients to insure they are treated with respect and all of their needs are met. In addition I am the listing agent for the team hel....
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