Hold On, Here We Go Again!

Hold On, Here We Go Again!

FHA is Raising MMI

 HOLD ON, here we go again! FHA is raising the annual Mortgage Insurance Premiums which is known as the FHA Monthly Mortgage Insurance (MMI). These changes are covered in Mortgagee Letter 11-10 and become effective April 18th, 2011. The new change is 25 bps or .25%.

Now remember that we just had an increase by FHA that went into effect in October of 2010.  FHA Commissioner David Stevens commented:

"After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA's capital reserves and help private capital return to the housing market.  This quarter point increase in the annual MIP is a responsible step towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments."

 Here is how it will effect monthly payments: