FHA MIP (Mortgage Insurance Premium) Going Up
Considering getting an FHA loan? If you close your FHA loan prior to April, it will save you money. The reason is due to an announcement from FHA about the MIP (Mortgage Insurance Premium) requirements going up starting with all FHA case numbers that are assigned after April 18, 2011.
The increase in FHA MIP applies to only 15 and 30 year fixed rate FHA loans which are the most popular in the FHA loan program family of products.
There have been questions about the FHA’s reserves and the increase in MIP is the second raise in about a year, but if there is any good news about the announcement, the UFMIP (Up Front Mortgage Insurance Premium) required to be paid in order to get an FHA loan remains at 1%.
What does this mean to the average FHA borrower? A rough estimate of what the average increase in cost is about $30 more each month and the change is expected to generate about $3 billion toward the FHA insurance fund annually.
“After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market,” said Stevens. “This quarter point increase in the annual MIP is a responsible step towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.”
More Information About The MIP Change
See the official mortgagee letter explaining more about the change.
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