Here we go again folks! FHA is making more changes with regards to the up front mortgage insurance premium and the rate charged on the monthly mortgage insurance. You can read all about it in summary and in full using this link, http://www.govtrack.us/congress/bill.xpd?bill=h111-5981
In a nutshell, the current UFMIP is 2.25% of the loan amount and it will be reduced to 1% which sounds like a great thing doesn't it? The monthly mortgage insurance will be increased from .55% to .85% or .90% depending on the loan to value. Hmmm.... not so great. Even though the up front amount is reduced, the monthly increase boils down to about $65 more per month for the borrower. This is based on a $250,000 purchase and ballpark numbers but gives you a pretty good idea of what's going on.
This change will increase the ratio's thus lowering the buying power of most buyers. It may not seem like much to some but for first time buyers, it does.
Luckily this change will not effect th following FHA programs: Title I, HECM, HOPE for Homeowners (H4H), Section 247 (Hawaiian Homelands), Section 248 (Indian Reservations), Section 223 (e) (declining neighborhoods), Section 238(c) (Military Impact areas in Georgia and New York).
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