Major changes are in place for FHA’s mortgage insurance guidelines. As of November 16th the FHA announced, in their Annual Report to Congress, an increase in the cost of their monthly mortgage insurance as well as a change denying policy holders to switch their insurance (unless the borrower refinances out of the FHA loan). So not only are they raising the price of the insurance premium, they’re locking homeowners into the premium for the life of the loan.
The unfavorable changes appear to be triggered by HUD’s fear that FHA's mortgage insurance fund is in jeopardy. These alterations are obviously an effort by HUD to beef up the fund. The first change will increase the buyer’s monthly FHA mortgage insurance payment by 10 basis points. For example, insurance on a $200,000 loan would result in paying $17 more per month. The second change in policy eliminates the option of canceling FHA mortgage insurance. The impact of this all depends on the buyer’s ability to refinance out of their FHA loan. As long the homeowner meets the requirements for a conventional loan they’ll likely have the option to cancel monthly mortgage insurance. To find out more about loan programs and what you may qualify for check out themelinteam.com
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