Planning to use an FHA-backed mortgage for your next home loan? You might want to get your application rolling right away. Beginning next week, the Federal Housing Administration (FHA) will start increasing mortgage insurance premiums for FHA mortgage borrowers. This will be the fourth premium increase since 2010, and it is intended to help shore up the shaky finances of the FHA insurance fund.
FHA UFMIP and MIP Rates to Increase April 9, 2012
Starting April 9, 2012, the annual mortgage insurance premium, or MIP, will increase 10 basis points, which will cost homeowners an extra $100 per $100,000 borrowed per year.
The following is a rundown of the new MIP rates for loans less than or equal to $625,500:
- 15-year loan term, loan-to-value > 90% : 0.60% MIP per year
- 15-year loan term, loan-to-value <= 90% : 0.35% MIP per year
- 15-year loan term, loan-to-value <= 78% : 0.00% MIP per year
- 30-year loan term, loan-to-value > 95% : 1.25% MIP per year
- 30-year loan term, loan-to-value <= 95% : 1.20% MIP per year
For loans larger than $625,500, there will be an additional 25 basis points added.
To calculate your monthly MIP payment, simply multiply the loan amount by the insurance rate from the list above, then divide by 12. This is the monthly installment that will be added to your regular mortgage payment.
Starting April 9, 2012, the upfront mortgage insurance premium, or UFMIP, will increase by 75 basis points from 1% to 1.75% of the loan amount. UFMIP is paid once at loan closing and is typically financed into the loan balance whether you’re purchasing or refinancing.
The Changes Apply Only to New Case Numbers
Note that the mortgage insurance changes apply only to new FHA case numbers obtained on or after the change date. If you already have an existing FHA loan or an FHA application in process, you will not be subject to the new MIP rates as long as you have your case number before the changes take effect.
Again, if you plan to take advantage of FHA financing, get your application rolling right away. The early bird gets the worm, so make sure to get your applications in to avoid the new higher premiums.