February 14, 2011 – HUD announced today that it will be increasing it’s Annual Mortgage Insurance Premiums by 25 basis points, on all appraisals ordered on or after April 18, 2011. There will be no change to the Upfront Mortgage Insurance Premium, currently at 1%.
The Annual Mortgage Insurance Premiums is the mortgage insurance that is included in your payment (1/12th), the Upfront Mortgage Insurance Premium is the amount that is added to your loan amount.
Currently, the annual premium for 30-year mortgages, with Loan-to-Value’s (LTV) over 95% is 90 bps, as of April 18, 2011, this will increase to 115 bps. LTV’s below 95% will increase from 85 bps to 110 bps on 30 year mortgges.
15 year mortgage’s will also be hit with the increase. Currently LTV’s less than 90% have no annual mortgage insurance, but not so after April 18th, add 25 bps to your payment, and over 90% LTV will increase from 25 bps to 50 bps.
So what does all this mean? Higher mortgage payments! This is the second increase in Annual Mortgage Insurance Premiums in less than 1 year. October 1, 2010, HUD raised the premium from 55 bps on 30 year fixed rate mortgages to 90 bps on LTV’s over 95%.
If you are looking to purchase or refinance with FHA financing and have been sitting on the fence waiting for home prices to drop, you may want to re-consider, and have a case number assigned (appraisal ordered) before 4/18/2011. Your monthly payment on a FHA 30 year loan with 3.5% down, will go up a little more than $41.00 per month on a purchase price of $200,000.