FHA to increase fees…Again!!

FHA is once again increasing mortgage insurance premiums (MIP) on all new purchase and refinance transactions. Effective for FHA loans that have been assigned on or after June 3, 2013 and in addition to this increase, the Annual Mortgage Insurance Premium will remain for the life of the loan. Meaning, you can only remove the mortgage insurance by refinancing out of the mortgage or selling the home.

FHA had just increased all its rates just over a year ago to 120 basis points (1.2% of the loan amount) of the loan amount and now it will be as high as 155 basis points. On a $100,000 loan amount, the old mortgage insurance payment would have been $100 per month; the new Mortgage Insurance payment will be $129.17. Considering just 2 years ago, the mortgage insurance premium on all FHA loans was 55 basis points (just over a half percent) and that payment on $100,000 would come to $45.83.

So even though mortgage rates have come down over the last 2 years, this increase in Mortgage Insurance has caused the cost of this loan to increase dramatically. Also with this additional cost, you can no longer have the mortgage insurance just drop off once you gain 20% of equity in the home.

Now, these may not seem like big increases to you, but for someone borrowing $400,000; this would have the Mortgage Insurance going from $183.33 to $516.67. Imagine…paying $516.67 for mortgage insurance!!

Now is the best time to get pre-approved by a qualified Loan Officer to give you several choices of mortgage programs. It is not always wise to chase to the lowest rate available without truly understanding the overall mortgage program.

Call me to find out about low down payment loans, as low as 3% with-out any mortgage insurance at all.

I can be reached at 978-273-3227 or feel free to email me at bill@billnickerson.com

FHA Streamline Refinance

Do you currently have an FHA mortgage?  And has it not made sense to refinance because of the High Mortgage Insurance Premiums?  Well, FHA just announced that it is going to reduce the Mortgage Insurance fees for current FHA mortgage holders.  But before you get excited, there are some rules to follow.

You must have taken the mortgage out prior to May 31^st 2009 and of course be current on all payments.  The Up Front Mortgage Insurance Premium will be greatly reduced and the monthly mortgage insurance is only 55 cents per thousand borrowed.  This is huge news…for the last several months; homeowners have not been able to refinance their current homes due to insurance being so high!

THE BENEFITS:

Refinance at today’s historical low rates

Refinance with NO closing costs

NO APPRAISAL REQUIRED (the term can be the lesser of 30 years or remaining term plus 12 years)

NO income verification required (we simply verify you are currently employed but not the income amount)

Restrictions include the following:  You cannot have missed a mortgage payment for at least the last 12 months.  You have to be currently employed (income is not a factor).  You must still reside in the home as your primary residence.  Other restrictions may apply. 

Last month, the Obama Administration announced a broad package of actions and legislative proposals to help responsible homeowners save thousands of dollars through refinancing. This includes the changes announced today that will benefit current FHA borrowers – particularly those whose loan value may exceed the current value of their home.  By lowering monthly mortgage costs for homeowners, FHA hopes to help more borrowers stay in their homes, thereby decreasing the potential for future defaults and reducing losses to the Mutual Mortgage Insurance (MMI) Fund.

Currently, 3.4 million households with loans endorsed on or before May 31, 2009, pay more than a five percent annual interest rate on their FHA-insured mortgages.  By refinancing through this streamlined process, it’s estimated that the average qualified FHA-insured borrower will save approximately $3,000 a year or $250 per month. FHA’s new discounted prices assume no greater risk to its Mutual Mortgage Insurance (MMI) Fund and will allow many of these borrowers to refinance into a lower cost FHA-insured mortgage without requiring additional underwriting.  FHA-insured homeowners should contact their existing lender to determine their eligibility.

June 11^th is just around the corner.  Contact me today to refinance into a lower interest rate.           

Bill Nickerson        Bill@billnickerson.com         978-399-1313