The Federal Housing Administration is going to be making some changes to the FHA loan. These changes will go into effect on October 4, 2010. The two aspects of the FHA loan that are changing are the Up Front Mortgage Insurance Premium (UFMIP) and the Mortgage Insurance Premium (MIP) that is charged to borrowers on a monthly basis.
The UFMIP is actually going to be reduced from 2.25% to 1%. This fee is taken and put into an escrow account at the US Treasury and is distributed to HUD on a monthly basis in case the borrower defaults on their loan.
The MIP is going to be raised from.55% of the loan amount per year to.85% of the loan amount per year. So what does this mean for you? Well, every situation is unique so it's important to speak with a Home Loan Expert in order to make sure you're getting the most accurate information for your situation. Your down payment and loan-to-value ratio will determine what your MIP payment will be. However, for a $ 200,000 loan, borrowers can expect to pay roughly $ 60 more per month after the new changes go into effect.
With mortgage rates currently at historic lows, and additional changes and fees on the horizon the time to complete that home refinance you've been thinking about or make your home purchase is now. Do not pay an extra penny more than you have to in today's market. Contact a trusted mortgage professional to see if an FHA loan is right for you.