For the third time in 12 months, the FHA is changing its mortgage insurance costs.
Effective for all FHA case numbers assigned on, or after, April 18th, 2011 annual mortgage insurance premiums (MIP) will increase 25 bases points.
Current FHA borrowers are unaffected.
To understand FHA is to understand why premiums are rising.
As an institution the federal Housing Administration plays a much larger role in U.S. housing market today than it did in the past 5 years.
Rapid growth has strained the FHA capital. The FHA states that the MIP increases will strengthen its reserves. By law it must maintain a certain level of reserves.
FHA Mortgage insurance varies by, loan term, and by loan–to-value. Beginning April 18th, 2011 the new insurance premiums are as follows:
• 15 – year loan term, loan-to-value > 90% : 0.05% per year
• 15 – year loan term, loan-to-value < = 90% : 0.25% per year
• 30 – year loan term, loan-to-value > 95% : 1.15% per year
• 30- year loan term, loan-to-value < = 95% : 1.10% per year
To calculate your monthly mortgage insurance premium, multiply your starting loan size, by your insurance premium and divide by 12.
There is no change to the 1% upfront mortgage insurance premium charged by the FHA.
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