FHA to Raise Mortgage Insurance Premiums on April 1, 2012

Another Posting By:  www.sarahibbard.com

Judy Jones, Vice President of Metro Home Mortgage tells me HUD announced this month that they were raising the Mortgage Insurance Premiums (MIP) effective April 1, 2012. The Upfront MIP is changing from 1% to 1.75% and the Annual MIP is changing from .90% to 1.25%.

Before you panic about this bad news… the bottom line is that on a $100,000 FHA base loan amount, the payment will increase less than $7 per month as a result of both MIP premium increases.
The increase will affect only new loans with FHA Case numbers ordered on or after April 1, 2012.

There are two types of Mortgage Insurance on FHA loans:

1) Upfront MIP is calculated by multiplying the loan amount by 1.75% and then adding that amount to the base loan amount. The “Upfront MIP” is financed into the loan.

2) Annual MIP is calculated by multiplying the loan amount by 1.25% and dividing that total by 12 to equal a monthly amount that is paid as part of the homebuyers total monthly mortgage payment.

This is the fourth increase HUD has made to FHA MIP costs in the last 2 years. These increases have been necessary due to the rapid increase in the number of loans that are insured by HUD under the FHA program.

In 2006, FHA insured about 2% of all loans made for purchasing a home in theU.S.  In 2011, that percentage jumped to 18% of all loans used to buy a home.  As the number of FHA loans have increased, so have the number of foreclosures resulting in the need for HUD to raise more revenue.

All new FHA loans with case numbers ordered on or after April 1, 2012 are subject to the increased MIP amount. The changes will affect both purchase and refinance loans. Existing FHA-insured homeowners will not be affected by the MIP rate change.

Sara Hibbard is a licensed Realtor in the state of Georgia and works mainly in the north Atlanta metro area.  If you need a referral to a qualified lender to discuss your unique situation, Sara will be happy to recommend a professional who specializes in your area of need.  In the meantime, Sara is always available to take your call and answer any questions you may have regarding the Atlanta metro real estate market in general or specifics regarding the buying / selling process.   Sara Hibbard is easily reached at 404-660-2481 or via e-mail at sara@SaraHibbard.com.  Visit Sara's website at www.SaraHibbard.com. 

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