FHA has announced changes coming for 2013. There are two major changes that will affect home buyers.
The first is HUD's plan to increase the annual mortgage insurance premiums paid on FHA insured loans by an addtional 0.10 basis points (0.1% of the loan amount). The premium increase is to help strengthen FHA's capital position without limiting access to credit for qualified borrowers. On a $150,000 mortgage amount, it would increase the monthly MIP by about $13/month.
The second change is to revise the cancellation policy on mortgage insurance for FHA loans. Currently FHA will eliminate mortgage insurance after your loan is paid down to 78% of the original balance. This change was made in 2001. Now HUD wants all FHA mortgage insurance to continue for the life of the loan. FHA insures the 100% of the remaining balance, so if a homeowner defaults on their mortgage after the MIP has been removed, FHA is still insuring the loan. Analyses conducted by FHA's Office of Risk Management projects lost revenue by about $10 billion in the 2010-2012 time period as a result of the current policy. The analysis also suggests that 10-12% of all claims will occur after MIP cancellation.
What this means to homebuyers is that if you are looking at FHA as a mortgage option, you should look at buying sooner than later!! We aren't sure when these changes will take affect other than later in 2013. There is a chance that they will delay the new changes, but for now, expect that in 2013 FHA mortgages will cost a little more and the MIP will be not go away.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage and Equity Consultants – Email – Website
.
