Currently FHA loans have a one-time fee at closing of 2.25% of the loan amount for UFMIP and a monthly rate of 0.55%. Under the new guidelines the UFMIP will drop from 2.25% to 1.00%, however the MMIP will increase from 0.55% to 0.95% for 20 and 30 year loans of 95.01% loan-to-value (LTV) and greater and .085% for 20 and 30 year loans of 95% LTV and less.
15-year loans with a LTV of 95% or less will not be subject to MMIP and from 95.01% LTV and greater the MMIP will still be 0.25%. There is no change here.
Currently the median price of a home in Salt Lake County is $224,500. In terms of a FHA loan this equates to an upfront mortgage insurance premium of $5,051.25 and a monthly mortgage insurance premium is $102.90. The up-front mortgage insurance is rolled into the loan and adds about $24 a month to the principal and interest payment. The changes will drop the UFMIP to $2,245.00 but increase the monthly premium to $177.13 on a loan of 95.01% LTV or greater. Overall an increase of about $60 a month on a $224,500 loan.
What this is going to do is decrease the loan amount buyers will qualify for. The median household income in Salt Lake County as of the last census is $58,000 annually. Currently this would qualify this home buyer(s) for a FHA loan of $244,000. After October 4, 2010 the same buyer will qualify for a FHA loan of $232,000.
So if you’re looking at doing a streamline refinance on your current FHA loan or want to refinance an ARM or other loan into a fixed-rate FHA, call your loan officer now. If you are looking for a home it would be wise to get pre-approved for FHA loan now. FHA case numbers have must be assigned to new loan files by October 4 to beat the rate increase deadline.