HUD recently announced changes to once again raise mortgage insurance for FHA Home Loans starting on April 1, 2012. These latest changes mark yet another increase in the cost for FHA home loans, a trend that started in 2011 with a restructuring of the mortgage insurance premiums for these types of loans.
Starting on April 1, 2012, the upfront mortgage insurance for new FHA mortgages will rise from the current level of 1% to 1.75%. This will apply to FHA loans with an FHA case number on or after this point and will make the initial cost of getting an FHA loan more expensive. For instance, on a $200,000 loan, the upfront mortgage insurance costs currently are $2,000, but on that same loan, this cost will rise to $3,500 come April 1st.
In addition, there are more changes potentially to FHA mortgages that have not yet been finalized, but are under heavy consideration. Under these additional changes, on June 1, 2012, the monthly FHA mortgage insurance could rise an additional 10 basis points from the current level. What that would mean is that the monthly mortgage insurance could rise from the current 1.15% to 1.25% on loans with a 95% loan to value or higher ratio and from the current 1.1% to 1.2% on loans with a loan to value below 95%.
Furthermore, FHA is also considering reducing the total percentage of seller concessions to a buyer, from the current level of 6% to 3% on purchases, but this has not been finalized yet either.
The bottom line is that once again FHA mortgages are getting more expensive for most borrowers. If you are looking to purchase a home and use an FHA mortgage, keep in mind the April 1st date of the mortgage insurance hikes. While if you currently have an FHA loan and have been thinking about completing a refinance of your loan, the time to act again is sooner rather than later to avoid paying a more expensive price for your loan.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
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