New FHA Mortgage Premiums, effective 4/18/11

[ShanetheMortgageMan]

New FHA mortgage premiums were announced yesterday, effective for FHA case numbers assigned on or after April 18, 2011.  It is an increase of the monthly rate of mortgage insurance, the upfront mortgage insurance still remains at 1%.

The increase is .25%, and most importantly also affects all loan-to-values.

With loan terms longer than 15 years, with less than a 5% down payment, the premium will increase from .9% to 1.15%.  With a 5% or more down payment, the premium will increase from .85% to 1.1%.

With loan terms of 15 years or less, with less than a 10% down payment, the premium will increase from .25% to .5%.  With 10% or more down, there will now be a .25% premium rather than no premium.

For example, on a $163k sales price, with 3.5% down, 30-year term, the current monthly premium would be $118.  With the new premium it would be $151, or a $33/mo increase.  This does not effect homeowners who already have FHA loans, it is only for new loans which FHA case numbers have not been assigned until April 18th & after.  To have an FHA case number assigned there must be an active loan application for the borrower and property.  For refinances that is simple since the property is already known, but for purchases some lenders may need you to be under contract or have made an offer, and there will be some lenders that will just need to be given an address.

For people who like all of the fine print, Mortgagee Letter 11-10 (.pdf link) has full details.

[Heavanly1]

Thanks for the heads up Shane!

I just signed my sales contract last week but won't be closing prior to April 18th because it's a new construction. I let my LO know about this change and she's going to make sure that I get my FHA case number assigned ASAP. That change in PMI premiums would have cost me an additional $47 a month!

Thanks again!

[ShanetheMortgageMan]

You are welcome.

[indiasnowden]

Made it under wire - timing is everything.  Thanks for the info and all the great forum advice.

[Anonymous]

Thanks...is this rate increase applying to nonFHA conventional loans?

[ShanetheMortgageMan]

Nope, just FHA loans.  So this makes conventional loans look a little more appealing.

[Heavanly1]

I have a quick question in reference to new the FHA mortgage premiums.

I'm currently under contract for a new construction. I went under contract in late February and my FHA case number was assigned then, thus avoiding the increased mortgage premiums.

My new home was suppose to be completed sometime in June. However, I just received word that construction has been delayed and the home won't be delivered until sometime in August. However, August is not a solid date and I'm anticipating delivery to be later than that.

From everything I've read, FHA case numbers will be automatically cancelled after six months if there is no activity. Therefore, if the home is not delivered to me by mid-August, I'd have to get a new case number and pay the higher mortgage premiums. However, when I asked my loan officer about this, she said that my case number was good for 12 months. While I want to believe that I have no worries, I can't seem to find anything anywhere that says that my case number will be good for that long and I'm starting to wonder where she got that number from.

Does someone know how long FHA case numbers are good for?

[ShanetheMortgageMan]

But loans that either have #1 an appraisal update has been entered (i.e. simply putting in the appraisers name, entering in an appraised value, etc.) or #2 where the upfront mortgage insurance premium has been received are not automatically cancelled after 6 months.

The automatic cancellation is just a default process that happens when an FHA case # is pulled and there isn't any "action" afterwards - so just make sure the appraiser information is entered so they can prevent your FHA case # from being automatically cancelled.