FHA LoansHere is a little about the new changes in FHA financing due to take effect In April, 2012:

“HUD recently announced that mortgage insurance for FHA loans will increase April 1, 2012 and again June 1, 2012. Mortgage insurance, protect one party from the risks of the borrower becoming delinquent of going into foreclosure.

FHA loans have two types of mortgage insurance.

As FHA mortgage insurance these days, consists of an up-front mortgage insurance premium equal to of 1 percent of the loan’s amount. Upfront MIP can be added to closing costs, or borrowers can finance it by adding it to the loan amount.

There is also an annual Mortgage Insurance premium that varies by loan type. For 30-year fixed rate mortgage, annual MIP is equal to 1.1% of your loan size for LTVs of 95% or lower. For everyone else, annual MIP is 1.15% of the loan size.

Annual MIP is paid monthly. The formula is (Loan Size) * (MIP Rate) / (12 Months) = Monthly MIP payment.

So what the does the FHA’s new (2012) mortgage insurance rates mean to FHA mortgage applicants?

Starting April 1, 2012, Upfront MIP for loans raises from 1.000% to 1.750% of the loan size. Annual MIP fees change, too, climbing by 10 basis across the board, and by an additional 25 basis points for loans between $625,500 and $729,750.

$729,750 is the largest FHA loan limit. It’s reserved for high-cost areas in the country, especially California.

If you think you’ll want an FHA loan for your next mortgage, the best way to avoid the new FHA fees is to have your FHA Case Number assigned before the new FHA MI premiums go into effect April 1, 2012. All existing FHA mortgages will use the “old” MI rates.

Best Regards,

Narbik Karamian
DRE Lic: 01372576
BeneGroup, Inc.
A Premier Mortgage Brokerage and Real Estate Consulting Firm
Cell: (408) 315-2834
Fax: (408) 395-7561