HUD to Increase MIP

By
Real Estate Agent with TIM LORENZ - Elite Home Sales Team DRE# 00919781

HUD Increases MIP

The Department of Housing and Urban Development (HUD) has announced effective April 18th, 2011 an increase in the Annual Mortgage Insurance Premium (MIP) for all new loans registered on or after that date. The new monthly MIP factor will be 1.15%

In 2010, HUD increased the monthly MIP from .55% to .90%. At the same time HUD lowered the Up-Front MIP from 2.25% to 1.00%. The Up-Front MIP remains at 1.00% when the change takes effect April 18, 2011.

Example of the Annual Mortgage Premium Increase on a $400,000 Loan

.55% = $183 Monthly Payment

  .90% = $300 Monthly Payment

  1.15% = $383 Monthly Payment

  

Example of the Up-Front Mortgage Premium Decrease on a $400,000 Loan

2.25% = $9,000 Up-Front MIP

1.00% = $4,000 Up-Front MIP

  

In a one year time period the cost of the Annual MIP on an FHA loan has increased by $200 for the buyer's monthly payment. However, the cost of the Up-Front MIP has decreased by $5,000. Since the majority of all FHA buyers finance into their loan, the Up-Front MIP, they don't feel the reduction offsets the impact of the increase of the monthly payment. HUD stated the reason for the increase was "So FHA can continue its historic role of providing a home financing vehicle during periods of economic volatility and its mission of helping underserved borrowers".

  

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California Orange County Mission Viejo
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Rainmaker
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Gail C. Harris
Resource Network, LLC SFR, AHWD, ACRE, SMAR Board Director - Chesapeake Beach, MD
Reach the BEACH with Gail C. Harris (cell: 703.868

That's a hefty monthly fee on a $400,000 home.  Nice that the up-front cost has come down.  I'm of the very old school, and feel that if all these people had 205 of their own money invested in their homes, people would have gotten 2nd and 3rd jobs to hold onto them, or would have pony-up to their real income.  A person on our street, for instance, bought their home cash for $735,000 and turned around 5 months later and pulled out $745,000 in cash.  Now they find it easy to walk away!  It's up for a short sale at $450,000 stating divorce as the hardship, and gee we don't know what we did with the money!! If they had $149,000 invested in their property they wouldn't be letting it go.  Just an observation.

Apr 04, 2011 08:33 AM #1
Rainmaker
1,025,103
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

I understand what you are saying but there are in our area over 12 percent out of work for many months and no work.  Those people have a sever hardship and have to do short sales because the prices have dropped more than 50%.  I had one client whos daughter got cancer and they could not afford to do anything but pay medical bills.

Apr 04, 2011 09:46 AM #2
Rainmaker
856,247
Elite Home Sales Team
Elite Home Sales Team OC - Corona del Mar, CA
A Tenacious and Skilled Real Estate Team

That is a large increase on a loan and in this area it will really cost our buyers a lot.

Apr 17, 2011 12:29 PM #3
Rainmaker
1,025,103
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

I think the HUD increases will hurt the industry as a whole.

Apr 17, 2011 12:51 PM #4
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Rainmaker
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Tim Lorenz

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