FHA first shared these changes on August 4th, after it had been approved by Congress and then the President signed off on it on August 11th. FHA has finally come out with the mortgagee letter, ML 2010-28, which puts it officially in writing now.
This mortgagee letter is effective on FHA loans in which the case number is assigned on or after October 4th, 2010. This policy will increase the monthly mortgage insurance and decrease the mortgage insurance premiums for purchase money and refinance transactions, to include FHA streamline refinances.
So what are the major FHA changes regarding mortgagee letter 2010-28? - For terms greater than 15 years -
- LTV's <= 95% will increase the monthly fee to 85 bps >> Old monthly fee was .50 bps
- LTV's > 95% will increase the monthly fee to 90 bps >> Old monthly fee was .55 bps
And lastly, it will reduce the Upfront Mortgage Insurance Premium, UFMIP, from 225 basis points to 100 basis points.
How will this affect new homebuyers?
3 quick examples (these examples are putting the minimum down payment of 3.5%)
- On a $275,000 mortgage – the change in payment would be about $70 higher a month
- On a $200,000 mortgage – the change in payment would be about $45 higher a month
- On a $125,000 mortgage – the change in payment would be about $27 higher a month
Buyers Beware - If you have your eye set on a specific home, or are negotiating on a property, or are very serious about buying soon, you will have 31 days to make a mortgage application before these new changes take place.
FYI in regards to Charlie Ragonesi's comment, #4 - I still don't think that this will move buyers from FHA loans to conventional loanss. Here is my reason why... please read : FHA loans vs conventional loans - The buyer's buying power will only decrease by about $10,000 or so.
These 2 posts I wrote previously below go into more details about the changes and showing more detailed figures.
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For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors
Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc
_____________________________________________________________________________________________________________________________
FOLLOW ME ON FACEBOOK
- FHA Loans - USDA Loans - VA Loans -
- Energy Efficient Mortgages -
- Conventional Loans - 203 k loans -
- FHA Home Loans - Mortgages -
Experience & Knowledge at its BEST !!!
Follow me on:
______________________________________________________________________________________________________________
For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors
Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc
Jeff - this is important information for us, and buyers and sellers, to know about. We can always count on you to get us the latest updates on FHA. Suggested for a feature so that more can learn.
Jeff
Jeff. it seems if the new rules impact the monthly payment as you described it will still be tougher to get into a house.
Jeff, thanks for this.
Thank you Jeff for the update and this good nformation. There are too maNY FHA'S OUT THERE MAYBE THiS WILl MOVE SOME TO CONVENTIONAl
Thanks Jeff, I reblogged for my Ann Arbor Area home buyers.
Jeff - thanks for keeping us updated for the latest FHA guidelines.
Jeff - just linked to this from my First Time Buyer Central blog. Good stuff
JEFF... . my pleasure and thanks for your support and for suggesting this. .. and yes, we do need to get this out to everyone in the industry, most of all, to the buyers.
GARY.... . in my opinion, it won't make it that much tougher... in many cases, you are talking about a reduction in price by about $10,000 or so... but it will hurt some depending on the market and the price cut offs. thanks
SUSAN... . my pleasure and thanks for stopping by.
CHARLIE.... . well, as I showed in this example, FHA loans vs conventional loans, in my opinion, it won't change people from going to FHA to conventional. But thanks for your input.
MISSY.... . my pleasure and thanks for your support and for reblogging this.
PETRA.... . thanks for stopping by and my pleasure.
JEFF... . thanks for coming back and for linking this to you first time buyers blog.. and thanks for the compliment.
Jeff, thank for posting! I found it on Missy's page and I followed to you. Hopefully you will get a feature out of it! I will re-blog also!
Hi Jeff - I saw your Agent Genius post - and now this. I reblogged and suggest it for a feature! Thanks as always for the up-to-date information.
Am I reading this right? UFMIP will be 1% instead of 2.25%? Over the course of 4+ yrs of payments, they'll be paying more but not by a lot. Plus if they have to sell, the mortgage balance will be ever so slightly lower.
I actually see it as a little of a positive, but then I despise UFMIP with a white hot passion.
DAMON... . thanks and yes, I read your comment on Missy's reblog... thanks and it doesn't look like it will be featured... AR need to spread around the features and this is already 24 hrs old to them. But seriously, thanks...
RUTHMARIE.... . my pleasure...thanks for noticing this post and for suggesting it...
JULIA... . there is always some sort of positive out of many things... but depending on the purchase price, that payment could increase anywhere from $25 a month more to over $100 month more...
Not sure if you read this post, Bill H.R. 5981 passes - FHA Mortgages to increase it's annual mortgage insurance premium, but I show a chart that explains the break even point and how much more you would be spending two years after that... just because you are still spending more a month. It's a tad confusing, but FHA knows what it's doing and in the long run, you will spend more total. thanks
I didn't read the other post (but I will now) and yes I do understand all of the payback period, etc and that FHA will collect more in the long run, assuming the buyer doesn't sell or refinance quickly. I just really hate UFMIP enough to see the silver lining in this cloud.