** As of today, this is a proposed change and is not finalized. **
Well, just when you thought it could not possibly cost any more... the Mortgage Insurance Premium, better known as MIP, as been increased for FHA loans.
As of right now, I do not have a Mortgagee Letter to reference, but will update this post at a later date with the correct Mortgagee Letter to go along with the below post.
Currently, the Upfront FHA premium is 1% of the loan amount. The premium was lowered from 2.25% a year ago, which sounded great. Well, the new upfront premium beginning in April 2012 is 1.75%. The premium can still be rolled into the loan.
In addition, the Monthly MIP is going to increase from the current rate of 1.10% (5% down payment or higher) to 1.20%. And if you opt to pay less than 5% down, your monthly MIP is increasing from 1.15% today to 1.25%.
The monthly MIP is not a huge jump, but it could certainly make a difference to someone that already is pushing a High Debt-to-Income ratio. In turn, it could cause a client to go from 'qualified' to 'unqualified'. Once you have reached your DTI limits, your client would need to look for a slightly inexensive home.
If you know someone looking to buy a home and/or they are under contract, this would be good information to share with them. As long as the FHA case number is locked before April 1st, the loan will todays pricing instead of the April 1st pricing.
*** More to follow, as this gets finalized ***
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