Before I post the Charts showing the new FHA UpFront Premium and Monthly Insurance (MI) change that will take place on April 9th and further going up on June 11th, I think that I need to first post a chart showing the one good thing that FHA is doing in all the changes that they will be making.
Even with the interest rates as low as they have been refinancing has not been possible for many Homeowners. That is because along with interest rates dropping so have home values, and therefore, not enough equity in properties to refinance with. In many cases the value of the property has dropped below what the Homeowner paid for the property. Even properties that were purchased 5 or 6 years ago are facing this problem.
Homeowners in this situation a ray of hope at one time if they had an FHA Mortgage. FHA has an option call a "Streamline Refinance" which allows for a Homeowner with an FHA Mortgage to refinance into another FHA Mortgage without doing an appraisal. Therefore, the lack of equity in the property did not matter. But when FHA changed the MI multiplier in late 2010, and went from a .55 multiplier to a 1.15 multiplier, it took away much of the reason to do an FHA Streamline Refinance. The increased MI multiplier greatly reduced the saving that they would of have seen from the reduced interest rate.
But in the mist of all the crazy changes that FHA will be making starting the beginning of next month, they did listen a little, and decided to do something to help out these Homeowners. On June 11 FHA will reduce the MI multiplier on all Streamline Refinance Loans that closed on or before May 31, 2009 back to the pre 2010 MI multiplier of .55, and decrease (almost eliminate) the UpFront Premium down to .01%.
This will be a huge opportunity for many Homeowners with FHA Mortgage to finally take advantage of the lower interest rates. Hopefully this news will get out to these Homeowners, and Homeowner who are eligible to take advantage of this will start to call Lenders, and position themselves to take advantage of this change when it happens.
Below is the chart reflecting this change, and the new loan does need to be for a term of 15 or more years.
Tomorrow or Thursday I will post the charts reflecting the other FHA UpFront Premium and MI changes that are not a good change, and greatly reduce the ability of particularly First Time Homebuyers to purchase a home.
*************************************************************************************
Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
Comments(6)