The Federal Housing Administration plays a critical role in the nation’s housing financing system, providing safe, affordable mortgage financing to consumers in all markets during all economic conditions, the National Association of REALTORS® said in testimony today.
Click to read more: REALTOR® Magazine-Daily News-FHA Plays a Critical Role in Home Financing.
If you applied for a new FHA mortgage today, you may have noticed the upfront mortgage insurance has been reduced from 2.25% to 1%. That being said, your monthly premium has moved from .55 to .90. To learn more about the FHA Mortgage Insurance contact your Maine Mortgage Broker or Maine Mortgage Banker today.
FHA has announced it will make changes to it’s Mortgage Insurance Program. These changes will take effect for all new FHA case numbers issued as of October 4, 2010.
FHA loans require both an upfront mortgage insurance fee and a monthly mortgage insurance fee. The FHA has announced a change to these fees for all new FHA case numbers issued as of October 4th. 2010
The Upfront insurance fee is financed into your loan, added to the base loan amount once your down payment is deducted.
FHA case numbers can be ordered once a contract to purchase has been made and the loan application is signed.
Current FHA Policy, through October 3rd, 2010
Upfront mortgage insurance 2.25%
Monthly mortgage insurance 0.55%
New FHA Policy, as of October 4, 2010
Upfront mortgage insurance 1.0%
Monthly mortgage insurance 0.90%
What effect this will have to a borrower: While the loan amount will be lower due to the reduced Upfront MI cost, the monthly payment will be higher.
Typical loan scenario for a home price of $200,000
Net increase of (3.73%) $40.76 in your monthly payment.
Sales Price: $200,000 less FHA required down payment of $7,000 (3.5%) =
Base loan amount of $193,000
Current MI policy: $193,000 + Upfront mi 2.25% ($4,342) = total loan amount of $197,342
$197,342 @ 4.5% 30 year fixed rate = monthly principal & interest payment of $999.90 + monthly mi at .55% is $91.67 for a total of $1,091.67
New MI policy $193,000 + Upfront mi 1.0% ($1,930) = total loan amount of $194,930
$194,930 @ 4.5% 30 year fixed rate = monthly principal & interest payment of $987.68 + monthly mi at .90% is $144.75 for a total of $1,132.43
FHA loans have been a great way for Maine homeowners to qualify for high loan to value mortgages. With these new changes, look for Private Mortgage Insurance companies to become very aggressive with perhaps much lower monthly mortgage insurance rates.
To learn more about FHA and Private mortgage insurance, contact your Maine Mortgage Specialist today.
FHA Underwater Refinance Option Now Available
In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today will begin providing an additional refinancing option for underwater borrowers. Originally announced in March, this enhancement of Federal Housing Administration (FHA) refinance program will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lien holders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.
The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth – also known as being ‘underwater’ – because their local markets saw large declines in home values. As announced earlier this year, this change as well as other programs that have been put in place will help the Obama Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.
Participation in FHA’s short refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements. The property must be the homeowner’s primary residence and the borrower’s existing first lien holder must agree to write off at least 10% of their unpaid principal balance. In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent and a combined loan-to-value ratio no greater than 115 percent.
To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.
WASHINGTON – The Obama administration is trying to jump-start its sputtering attempts to tackle the foreclosure crisis with an effort to assist homeowners who owe more on their properties than their homes are worth.
The Federal Housing Administration will allow lenders to give these borrowers refinanced loans if the lender agrees to forgive at least 10 percent of the original mortgage amount.
The plan, which was announced in March, is being made available starting Tuesday.
The FHA said in a document published last month that between 500,000 and 1.5 million homeowners are projected to be helped.
However, the Obama administration’s previous efforts to stem foreclosures have fallen far short of expectations. Analysts at Barclays Capital estimated last month that the refinancing program would only aid between 200,000 and 300,000 homeowners.
As of the end of June, there were 11 million U.S. homes, or 23 percent of those with a mortgage with so-called underwater mortgages, according to real estate data provider CoreLogic.