FHA loan updates are imminent!
FHA MI (Mortgage Insurance) rates are being raised effective for all mortgages contracted on or after October 4, 2010. Waiting will cost more money.
Let me try to explain this as a lender has explained it to me. Don’t hesitate to call me with any questions! (717) 695-3177.
CURRENT FHA GUIDES:
Purchase price: 100,000
Base loan amount: 96,500
Upfront MIP at 2.25% 2,173.5
Total amount borrowed for customer: $98,673
NEW FHA GUIDES:
purchase price: 100,000
base loan amount 96,500
Upfront MIP at 1.% 965
Total amount borrrowed: $97,465
So the net result is the total amount borrowed will be a little lower, thus resulting in a stronger equity position long-term for the customer, and a slightly lower principal and interest. But now the catch, FHA will be charging more monthly MI. It will be based on credit score and will be going from approximately $55 per every $100,000 borrowed, to between $85 and $90 per every hundred borrowed.
So for the same scenarios above:
CURRENT FHA GUIDES
loan amount of 100k: monthly MI of $55
NEW FHA GUIDES
loan amount of 100k: monthly MI of $85 or $90 depending on credit score
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