FHA has changed their mortgage insurance premiums which will start with cases ordered on October 4, 2010. The most notable changes were that the upfront premium was 2.25% and is now 1.0 % for all standard FHA programs; On 30 year terms with loan-to-value ratios greater than 95%, there will be an annual premium of .90%, which previously was .55%.
These changes were made in light of the last changes made when the tax incentive was present. The current changes will make it less expensive upfront, but raise costs month to month which will help replenish FHA’s capital reserves.
Seller contributions have also been adjusted and limited to 3% of the purchase price which is more in line with industry standards.
You may want to contact your lender to get more details on these changes and how they could affect your transaction.
With the passing of H.R. 5981 and the
resulting Public Law 111-229, FHA was
given authority to change the amount
charged to borrowers for both the Up Front
and the Annual premiums. These changes
as outlined in Mortgagee Letter 2010-28,
are effective for all case numbers assigned
on or after October 4th, 2010.
Sherwin L. Sucaldito, REALTOR®
Member of The Institute of Luxury Home Marketing
Member of the Real Estate Buyer’s Agency Council, ABR
Certified Residential Property Manager, CRPM