Special offer

The FHA Mortgage Insurance Increase: In Real Numbers

By
Mortgage and Lending with US Bank NMLS: 22343
RPM Mortgage in California
 
The FHA Mortgage Insurance Increase:  In Real Numbers
 
 
On Monday, February 27, 2012, the Department of Housing and Urban Development released details of the upcoming FHA mortgage insurance premium (MIP) increases that will soon go into effect.  I didn't want to spend this blog post going over its reasons or intentions, you can read those in the press release.  Instead, I wanted to provide some real world examples of the changes and then open the floor for comments on what real estate professionals expect we may see.
 
(PIMI = Principal, interest and mortgage insurance)
 
Scenario 1
Purchase price:  $300,000
Down payment:  3.5% ($10,500)
Current PIMI:  $1631.57
Future PIMI:  $1665.74
Difference:  $34.17
 
Scenario 2
Purchase price:  $450,000
Down payment:  5% ($22,500)
Current PIMI:  $2391.50
Future PIMI:  $2441.96
Difference:  $50.46
 
Scenario 3
Purchase price:  $750,000
Down payment:  3.5% ($26,250)
Current PIMI:  $4078.90
Future PIMI:  $4254.83
Difference:  $175.93
 
Now that you've seen the numbers, how do you think this will affect YOUR housing market?   
 

                                            Google+

 
Robert J. Spinosa

Home Loan Professional
DRE: 01297944 NMLS: 22343

591 Redwood Hwy. Suite 1150
Mill Valley, CA 94941

877.270.5959 Toll Free
415.367.5959 Cellular
415.366.1590 eFax
rspinosa@rpm-mtg.com

 

Comments (5)

Nathan Rufty - 909-503-5600
Canopy Mortgage, LLC - Surprise, AZ
Mortgage Loan Originator at 909-503-5600

I read the press earlier today also and this is getting a little out of control, we had some consistency in our business for about a year and now this 

Feb 28, 2012 11:30 AM
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL
REALTOR

Rob - I honestly don't think it's going to make a difference with my FHA home buyers.

Feb 29, 2012 08:35 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Rob what a great question and a good illustration of the realities. Quite frankly some  buyers will not be effected by the increase, but   others might be eliminated by  a$50 per month  increase, especially as the price of gas and everything else is increasing. Therefore any increase will hurt the market.

Feb 29, 2012 10:15 AM
Rob Spinosa
US Bank - Larkspur, CA
Mortgage Loan Originator, Marin County

Thanks for your comments.  I agree, for the most part, that the change will not deter the motivated homebuyer.  However, where we do see these adjustments to the MI manifest themselves are in cases where an FHA mortgage holder tries to refinance.  Because the MI levels are not grandfathered, when a borrower attempts to get a lower rate, sometimes even if he/she can, the benefit is offset by the higher MI on the new loan.  It's not a perfect world, we all know that, but I think this is hindrance to the system that could be logically addressed AT THE SAME time the FHA protects its financial viability.

Feb 29, 2012 10:08 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Rob:  I think as real estate is local, the answer to this might be somewhat local in nature, as well.  And I also believe that any hit/rise to the costs in obtaining mortgages will have a detrimental effect at this time.  The markets are just so fragile.  Again, some markets will most likely see bigger responses than others ... but it will definitely take some out of the home buying market, at least for the short term.

Great food for thought and conversation ...

Gene

Mar 02, 2012 10:53 AM