Big changes for FHA
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FHA annual mortgage insurance will remain on the mortgage for the life of the loan. This is the mortgage insurance paid monthly by the borrower. Once in effect, home owners will need to either refinance to a non-FHA loan or pay it off to no longer have mortgage insurance. Currently, the monthly mortgage insurance can be dropped after 5 years with proof the loan to value is less than 78%.
Monthly Mortgage insurance is going to increase. The annual mortgage insurance (remember, this is the one that is paid monthly) is set to increase by 0.10 basis points. FHA Jumbo loan will see an increase in the mortgage insurance by 0.05%.
The first bullet point is huge. It used to be that after 5 years you could prove you are under a 78% LTV and the monthly mortgage insurance would be removed. Now it will remain for the life of the loan until its paid off or refi’d into a convetional loan.
The second one will mean monthly payments are going up for FHA loans.
Obviously FHA feels like it is way over exposed in the marketplace and is looking not be the MAIN source of funding for home loans. They are also trying to increase their capital reserve so they can pay out the mortgage insurance claims on foreclosures. They’ve been hard it the last few years.
Union Mortgage Group
582 Lynnhaven Prkwy ste 300
Virginia Beach, VA 23452