Posts Tagged Mortgage insurance

The VA Loan Funding Fee | Salt Lake City Mortgage

One of the great things about a VA loan is that there is no mortgage insurance (MI), however even the VA Loan Funding Fee can vary or even be waived depending on the amount of down payment, subsequent use or disability of the veteran.

Here is a quick guide to how much you can expect to pay as a funding fee for your VA loan:

Purchase and Construction Loans

Type of Veteran

Down Payment

Percentage for First Time Use

Percentage for Subsequent Use

Regular Military None5% or more (up to 10%)

10% or more

2.15%

1.50%

1.25%

3.3% *

1.50%

1.25%

Reserves/National Guard None5% or more (up to 10%)

10% or more

2.4%

1.75%

1.5%

3.3% *

1.75%

1.5%

 Cash-Out Refinance Loans

Type of Veteran

Percentage for First Time Use

Percentage for Subsequent Use

Regular Military

2.15%

3.3%

Reserves/National Guard

2.4%

3.3%

Type of Loan

Percentage for Either Type of Veteran Whether First Time or Subsequent Use

Interest Rate Reduction Refinancing Loans

.50%

Manufactured Home Loans (NOT permanently affixed)

1.00%

Loan Assumptions

.50%

 The following persons are exempt from paying the VA funding fee:

  • Veterans who are receiving VA compensation for service-connected disabilities.
  • Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay.
  • Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge disability examination and rating and,
  • Surviving spouses of veterans who died in service or from service-connected disabilities.

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FHA to raise monthly mortgage insurance premiums… Again.

HUD has announced that it will once again raise the FHA monthly mortgage insurance premium. As you may recall it increased last Fall from 0.55% annually of the loan amount to 0.90% annually of the loan amount for loans equal to or greater than 95% loan-to-value. The minimum down payment for FHA loans is 3.5% leaving an LTV of 96.5, so most FHA loans originated fall into this 0.90% category.

For all loans originated on or after April 18, 2011 the new FHA mortgage insurance rate will be 1.15%.

FHA monthly mortgage insurance premiums are figured like this:

Loan balance X MI rate = Annual amount / 12 months = monthly MI payment.

So:

$200,000 loan balance X 0.90% = $1,800 annually / 12 months = $150.00 a month MI payment.

With the increase the equation will look like this:

$200,000 X 1.15% = $2,300 / 12 = $191.67 a month mortgage insurance payment.

What this will effectively do is reduce the amount of loan you will qualify for by about $10,000 or so.

So, if you’re looking at buying a new home or refinancing, be sure to get your loan approval done before April 18th and save yourself some money.

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FHA set to increase monthly mortgage insurance premiums

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HUD is making some changes to both the upfront mortgage insurance premium (UFMIP) and monthly mortgage insurance premium (MMIP) on FHA loans.

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.

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