FHA Home Loans Refinancing

Will Higher Premiums Hinder FHA Loan Production in 2013?

02.20.13

Interest rates are going up, home prices are rising and now FHA confirms they are raising the rate on insurance premiums for FHA mortgages. 2013 has not started off as well as many FHA lenders and first time home buyers had anticipated. With today’s banks offering 30-year FHA mortgage rates hovering at 3.5% on fixed rate terms, now is the time to get your loan locked into the system.

The Federal Housing Administration recently announce that April 1, 2013 is the date when new borrowers will forced to pay higher mortgage insurance. The U.S. Department of Housing and Administration the looming changes. FHA will be implementing the annual mortgage insurance premium on most of the FHA loan programs that are issued a case number beginning the first of April or later. So the clock is ticking for many first time home buyers and current homeowners that are on the fence for a refinance loan. Al Pereida of the California Loan Center suggested “that applicants need to apply with a FHA mortgage lender no later than March 21st so that they get a case number issued before the deadline because after that monthly payments will be higher.”

On most FHA home loans, the annual premium goes up by 0.10% point, or $100 per year for each $100,000 in loan amount.  For loan amounts higher than $625,000 with a term greater than fifteen-years, the increase will be 0.05% point, or $50 per year for each $100,000 in loan amount.

Will FHA Borrowers Pay Mortgage Insurance Forever? FHA recently confirmed that in the future, if the borrower begins their new mortgage with a loan to value ratio above 90%, that the government agency will collect the mortgage insurance premium for the life of the loan. According to the SF Gate, “If the initial LTV ratio lies 78 and 90%, FHA will discontinue the insurance if the loan balance falls below 78% of the initial lien amount anytime after 11 years.”

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