April 1st, 2013 FHA Mortgage Insurance Increase Deadline

FHA mortgage insurance increases once again on April 1st, 2013.  This increase applies to all FHA mortgages with a case number on or after April 1st.

A case number is assigned when a loan is submitted for approval through an FHA authorized lender.  To submit a loan, you need a loan application, a credit report, supporting documentation and a property address.

Changes to the annual FHA Annual Mortgage Insurance Premium is as follows:

Loan Term Greater Than 15 Years

Base Loan Amount LTV Previous MIP New MIP
<$625,500 <95.00% 120 bps 130 bps
<$625,500 >95.00% 125 bps 135 bps
>$625,500 <95.00% 145 bps 150 bps
>$625,500 >95.00% 150 bps 155 bps

Loan Term 15 Years or Less

Base Loan Amount LTV Previous MIP New MIP
<$625,500 78-01% – 95.00% 35 bps 45 bps
<$625,500 >90.00% 60 bps 70 bps
>$625,500 78-01% – 95.00% 60 bps 70 bps
>$625,500 >90.00% 85 bps 95 bps

FHA Refinance Loans

If you are homeowner considering a refinance of your current mortgage, this deadline could directly affect your ability to qualify if your debt to income ratio, or if your benefit threshold is already close.

If you currently have a FHA loan on your home, a FHA Streamline Refinance is a low cost, reduced paperwork loan program that allows you to lower your interest rate without an appraisal as long as you’ve made your payments on time for the past 12 months.

The catch with qualifying for a Streamline Refinance loan is that you must realize a minimum 5% reduction in your principle and interest payment.  With the coming mortgage insurance increase of .10%, this could erase the 5% benefit for some homeowners.

FHA Purchase Money Loans

If you’re in the market to purchase a new home, this deadline is important, but you have less control over the timeline.  Your FHA case number is tied directly to a property address.

Homebuyers that are pre-approved but do not yet have an accepted purchase offer are unable to secure a FHA case number until there is a property address.  If you “think” you might get your offer accepted, it’s ok to have your lender secure a case number, but if your offer does not get accepted, the case number cannot be transferred to another address.

Sense of Urgency?

If you’re in a position to be able to secure a FHA Case Number prior to April 1st, 2013, and FHA financing is the only loan you can qualify for, you need to have a sense of urgency.

There are many other loan programs available in today’s market that offer alternatives to FHA financing, like the Community Access loan, or other conventional financing loans using Private Mortgage Insurance.

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