Getting A FHA Loan? Changes Coming April 1!

Screen Shot 2013-03-22 at 3.32.51 PMNew FHA mortgage program changes – what buyers need to know before April 1, 2013

The Federal Housing Administration has announced several changes to FHA mortgage programs that will begin April 1, 2013. These changes will impact customers who are in the market for or have recently qualified for an FHA loan.

The new changes revolve primarily around increasing mortgage insurance premiums. Before going into more detail, it may help to do a quick review of the two types of mortgage insurance required on the majority of FHA-insured loans:

  • An upfront mortgage insurance premium, or UFMIP, which is paid once at loan closing. FHA allows this premium to be financed into the loan.
  • A mortgage insurance premium, or MIP, which is paid in equal installments, is part of the mortgage payment.

Increased insurance premiums – and tightened criteria

As noted, the FHA program changes focus on mortgage insurance premium increases, but there are also other factors buyers should be aware of:*

  • Annual mortgage insurance premiums (MIP) paid by borrowers on most new FHA loans will increase by 10 basis points, or 0.1 percent; for loans of $625,500 or more, there will be an increase of 5 basis points or 0.05 percent.
  • Upfront mortgage insurance premiums will rise to 1.75 percent of loan size.
  • Most FHA borrowers will now have to continue paying annual premiums based on the unpaid principal balance for the life of their mortgage loan. (This reverses a policy that automatically cancelled required premium payments after loans reached 78 percent of their original value.)
  • It will be more difficult for borrowers with FICO scores below 620 and a debt-to-income ratio higher than 43 percent to qualify for the loans. They will not be eligible for processing through the FHA’s automated underwriting system and so will have to be processed manually, with lenders documenting compensating factors such as larger down payments – or a higher level of reserves.

Buyers beat the date

Buyers can still take advantage of the current, lower premiums. The new FHA mortgage insurance rates will apply to most loans that have a case number starting April 1, 2013 or later. Buyers  consult with a mortgage advisor about eligibility or the next steps you may wish to take.

*Source: Inman News, January 2013.

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*Assisting people achieve their dream of owning or selling a home with professionalism and excellent customer service *ABR, MRP, PMN, CNAS, TRLP Graduate *Licensed Texas REALTOR® #0207820 *Active member of the Women's Council of REALTORS®, Texas Association of REALTORS®, National Association of REALTORS®, San Antonio Board of REALTORS® and a TREPAC Contributor. *Love REFERRALS and love to REFER... *WHO IN YOUR CIRCLE OF FRIENDS IS THE MOST LIKELY TO MAKE A MOVE NEXT? *Whether you are moving to, from or within San Antonio, surrounding areas or anywhere in the United States, I am here to assist you. www.trudypape.com Coldwell Banker, D'Ann Harper, REALTORS® 7523 North Loop 1604 West San Antonio, TX, 78249 Texas Licensed REALTOR® #0207820 Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords. http://www.trec.state.tx.us/pdf/contracts/op-k.pdf
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2 Responses to Getting A FHA Loan? Changes Coming April 1!

  1. Perfspot.com says:

    An outstanding share! I’ve just forwarded this onto a colleague who had been doing a little research on this. And he in fact ordered me lunch simply because I discovered it for him… lol. So let me reword this…. Thank YOU for the meal!! But yeah, thanks for spending time to talk about this issue here on your blog.

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