Today is just a quick update to send out to all of you. Some of you are not going to understand this at all…don’t worry, it’s not crucial, but I wanted to get it out there so that if you hear something about it you will not be totally caught off guard.
HUD announced recently that they would be adopting a model that increases the FHA Mortgage Insurance Premiums based on the risk present in the loan.
I was finally able to get my hands on the adjustments and wanted to share what they look like. These changes DO NOT affect mortgage rates!! They only affect the mortgage insurance. (see explanation below)
| FHA Single Family Mortgage Insurance | |||||||
| Upfront and Annual Mortgage Insurance Premiums | |||||||
| (Loan Terms > 15 years) | |||||||
| Effective as of July 14, 2008 | |||||||
| All premiums are specified in basis points (0.01%) | |||||||
| Decision Credit Score (FICO) | |||||||
| LTV | NON-TRADITIONAL | ||||||
| 850-680 | 679-640 | 639-600 | 599-560 | 559-500 | 499-300 | ||
| ≤ 90.00 | 125/50 | 125/50 | 125/50 | 150/50 | 175/50 | 175/50 | 150/50 |
| 90.01-95.00 | 125/50 | 125/50 | 150/50 | 175/50 | 200/50 | n/a | 175/50 |
| > 95 | 125/55 | 150/55 | 175/55 | 200/55 | 225a/55 | n/a | 200/55 |
|
a. A first-time homebuyer, with HUD-approved counseling, will pay only 200 basis points for the upfront mortgage insurance premiums. (Chart courtesy of www.hud.gov) |
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The chart above shows boxes for credit scores and for LTV (loan to value). The numbers inside the boxes are the upfront insurance that gets added to the total loan amount and the annual figure that gets dived by 12 and then added to their monthly payment. Prior to the changes taking effect, all boxes would have shown 150/50. Calculating exactly what these numbers mean can be a bit complicated, but I wanted you all to see who is benefiting (some upfront mortgage insurance has been lowered) and who is not.
If you want to know how this affects you or a client, please call me and we can review the impact. One of the things worth pointing out is that if you have someone you are working with that might be penalized by this; be sure to get the FHA ID number ordered before July 14th and the customer will not be subject to the increases.
--Keith
**If you know someone else who would benefit from these updates, please pass this link on to them http://www.realestatemortgagenews.com
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