Congress voted to extend the payroll tax deduction portion of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. The measure cuts payroll taxes by 2% during January and February 2012. To pay for the program, Congress is requiring Fannie Mae, Freddie Mac and FHA to raise their respective fees.
FHA may be raising their monthly mortgage insurance premiums by 10 basis points which would mean a monthly mortgage insurance premium of 1.25% instead of 1.15%. That would increase the monthly payment on a $150,000 mortgage by $12.5o. We have not been directed by FHA yet and we do not have a start date, but be prepared that it may be coming!
Conventional loans will see the interest rates increase by about .125% to cover the cost to Fannie and Freddie. For a $200,000 mortgage, it will increase your monthly payment by about $17. Conventional loans are starting to see the increases already in pricing. Fannie and Freddie were directed to start collecting the money loans delivered in April 2012.
If you have a FHA mortgage and you want to refinance using the FHA streamline program, this will make it more difficult. In order to qualify for the program your monthly payment of principal, interest and monthly MIP must be reduced by 5% or more. Because of the increases to the FHA mortgage insurance over the last two years, it will be more difficult to do that. This increase will make it even more difficult.
If you are thinking about refinancing, you may want to talk to someone about it now. We know rates will start to go up and with these changes coming, the rates will go up sooner than later! As soon as we hear definite information about the start date of the increase for FHA mortgage insurance premiums, I'll pass it on.
Leslie Vanderwerf, NMLS ID#335509, Summit Mortgage - Email – Website
