Big Savings Coming Up on FHA Streamline Refinance Program, effective 6/11/12

by Irene Moustakas on March 8, 2012

In the midst of rising costs for FHA and Conventional loans, we are finally seeing some relief with the FHA Streamline Refinance program.  This does not go in effect until June 11, 2012, but that’s right around the corner! To qualify for the savings:

  • You must be current on your existing FHA-insured loan (no late payments)
  • Your current loan must have been endorsed by FHA on or before May 31, 2009 (so if you purchased or refinanced after this date, you do not qualify)

What the savings are:

  1. Instead of being charged the 1.75% Upfront Mortgage Insurance Premium (currently 1.0%, but it will be 1.75% on 4/1/12), your UFMIP will only be .01%.
  2. Your Annual Mortgage Insurance amount (paid monthly) will be .55% (not the 1.25% that will be charged beginning 4/1/12).

These changes to the FHA Streamline program will be of significant help.  Since FHA costs have risen the past couple of years, it has really limited a lot of homeowners currently insured by FHA to refinance.

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FHA Mortgage Insurance Increasing on April 9, 2012

by Irene Moustakas on February 29, 2012

(Blog post has been updated to reflect the new change date of 4/9/12, per FHA Mortgage Letter 12-4)

It’s happening again… FHA Upfront Mortgage Insurance Premiums, as well as the monthly Mortgage Insurance charges, are set to increase on April 9, 2012.  If you need an FHA loan, get in now before the changes are in effect!

What exactly is increasing?

Firstly, the Upfront Mortgage Insurance Premium (UFMIP): It is currently 1.0% of the loan amount, but will go up to 1.75% on April 9th.  The UFMIP can be financed into the loan amount, which usually makes sense from a numbers-perspective.

Secondly, the Annual Mortgage Insurance (which is paid monthly) is also increasing.  It is currently 1.15% for Loan-to-Value (LTV) ratios above 95.0% and 1.10% for LTVs 95.0% and below.  On April 9th, it will increase by .10% for loans under $625,500, and will increase by .35% for loans above $625,500.

Why is it increasing?

“After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” said Carol Galante, Acting FHA Commissioner.  In addition, the “Temporary Payroll Tax Cut Continuation Act of 2011” has mandated the increase.  This is the same Act that brought us increased Guarantee Fees.

What does this mean to you, if you are an FHA borrower?

Let’s take a look at how it will change, assuming a purchase price of $500k with the minimum required down payment of 3.5%.  Numbers take into account just the mortgage payment (Principal & Interest) and Mortgage Insurance, as these are the items that are affected by the change.

Payment based on current charges

$482,500 base loan amount + financing FHA’s 1.0% UFMIP ($4,825) = Total loan amount of $487,325.

Current 30 Year Fixed FHA interest rate is 3.75% (APR 3.817%).

  • Mortgage Payment: $2256.88
  • Mortgage Insurance (1.15%): $462.40

TOTAL: $2719.28

Payment based on charges as of 4/9/12, assuming interest rate remains the same

$482,500 base loan amount + financing FHA’s 1.75% UFMIP ($8,443.75) = Total loan amount of $490,943.75.

  • Mortgage Payment: $2273.64
  • Mortgage Insurance (1.25%): $502.60

TOTAL: $2776.24

So purchasing (or refinancing) the same home after April 9th will result in an increase of $56.96/month.

If you need help or are seeking advice on an FHA loan, please let me know.

 

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Choices: When the Appraised Value Comes in Lower than Your Purchase Price

February 22, 2012

If you are purchasing a home and the appraised value comes in lower than the sales price, this can be a deal-killer for many buyers.  Lenders calculate the loan amount based on the lesser of the purchase price or the appraised value.  If you’re at the Loan-to-Value ratio limit; for instance, you’re just putting 20% [...]

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A Reason to Lock Your Rate NOW Instead of Waiting

January 10, 2012

A new law has passed that will directly affect every person seeking a mortgage securitized by Fannie Mae or Freddie Mac, or insured by FHA, effective tomorrow, 1/11/12.  Nearly every loan right now is held by one of these Government-Sponsored Entities (GSEs), so this will affect almost everyone. The Temporary Payroll Tax Cut Continuation Act [...]

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A Mortgage Broker versus a Loan Officer at a Retail Bank

December 13, 2011

I am a member of the National Association of Mortgage Professionals, and received this email in my inbox this morning.  The NAMB President wrote a letter to President Obama regarding Obama’s use of singling out mortgage brokers when discussing financial reform laws.  It’s a good letter that points out some of the differences between mortgage [...]

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Purchase Loan Program Available for our Community Heroes: Police, Firefighters, Teachers & EMTs

December 5, 2011

There is a special program currently available to police, firefighters, teachers and emergency medical technicians.  The program, called Good Neighbor Next Door (GNND), offers a 50% discount on the list price of a home for HUD-owned properties.  In return, the borrower must commit to live in the property for a minimum of 3 years as [...]

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Expanded Program to Help Homeowners Whom are Underwater: HARP 2.0

November 16, 2011

Some good news that may open up refinancing opportunities for homeowners with little equity or whom are underwater: the Federal Housing Finance Agency, Fannie Mae and Freddie Mac are enhancing the Home Affordable Refinance Program (HARP).  We’re calling it HARP 2.0. HARP (and HARP 2.0) is specific to homeowners whose loans are currently owned by [...]

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“Senate Adopts Measure to Increase Fannie, Freddie Loan Limits”

October 24, 2011

Bloomberg Businessweek issued an article stating that the Senate has approved a measure to increase our high balance loan limits.  The measure now has to be passed by the House to become law. My fingers are crossed! Since reverting back to the “permanent” limit of $625,500 for high-cost counties, there has been a slow down [...]

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Reminder (and Warning) Regarding the 1st Installment of Property Taxes

October 13, 2011

As many of your homeowners know, the 1st installment of property taxes is due to the county on November 1st; considered late after December 10th.  You should all have your property tax bills by now. I will send out another reminder via my blog when they are due, and again, when they will be considered [...]

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Homepath 3.5% Closing Cost Assistance Expiring Soon

October 3, 2011

The 3.5% credit towards closing costs (and buying down an interest rate, if applicable) is expiring soon!  For any Homepath real estate purchase, you can still qualify for the 3.5% credit.  So if your purchase price is $400,000, you will receive a credit from Fannie Mae for $14,000. That’s huge! The details are listed directly [...]

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