FHA Changes – The Only Consistent is Change
As French Author François de la Rochefoucauld so perfectly stated, “The only thing constant in life is change.” Well, those words certainly ring true for the mortgage industry, which has seen a significant shift in guidelines, interest rates, and regulatory oversight. So, what is next?
FHA has been given the authority to change the amount charged to borrowers for the up front and annual mortgage insurance premiums… and they wasted little time making some adjustments.
This is going to impact how Realtors write up FHA purchase agreements, as well as the monthly payments borrowers might expect when buying or refinancing their home.
The new premium amounts will be effective on all FHA case numbers assigned on or after October 4, 2010 – so borrowers that already have an FHA transaction in process won’t be impacted, but new FHA clients who come into process on, or after, October 4th will be subject to the new guidelines.
Here’s what you need to know:
- The Up Front Mortgage Insurance premium is now 1.0% for all standard FHA programs, including on purchase money mortgages. This is a significant change from the 2.25% Up Front Mortgage Insurance typically in place on FHA 30 year Fixed Rate transactions.
