2013 Mortgage Insurance Premiums Increase Rates
Though the April 2013 MIP increase rates is bad news to all the homeowners who have to pay more on the mortgage insurance. The FHA mortgage offers has still quite a lot to offer new home owners and refinancing clients. Direct Your Own Loan reports more on this issue:
April 1, 2013 FHA MIP Increase
Mortgage insurance premiums for FHA loans can be as high as 1.60 percent as of April 1, 2013. However, this is the worst case scenario and only for jumbo loans over $625,000. For many homeowners, those with a 20, 25, or 30 year mortgage and 95.01% or higher loan-to-value (LTV), the annual premium will be 1.35 percent. Those with a lower LTV will receive 1.30 percent.
Increasing premiums 7 time in just the last 5 years the FHA is ensuring its survival. Also, by law the Federal Housing Administration is required to have a Mutual Mortgage Insurance fund with $2 for every $100 insured. This fund is used to pay for claims on FHA insured loans however recently they had a negative amount in their fund. See more.
Who Will Be Affected By This MIP Rates Change
Madison Mortgage Guys have sumed up this about MIP rates increasing at April 2013:
The following are effective for all mortgages with FHA case numbers assigned on or after June 3, 2013:
- Revision to the period for assessing the annual MIP;
- Removal of the exemption from the annual MIP for loans with terms of 15 years or less and LTVs of less than or equal to 78 percent at origination;
- Increase in the annual MIP for mortgages with terms less than or equal to 15 years and LTV ratios less than or equal to 78 percent at origination.
The table below shows the previous and the new duration of annual MIP by amortization term and LTV ratio at origination:
TERM LTV (%) PREVIOUS NEW ≤ 15 yrs ≤ 78 No annual MIP 11 years ≤ 15 yrs > 78 – 90.00 Cancelled at 78% LTV 11 years ≤ 15 yrs > 90.00 Cancelled at 78% LTV Loan term > 15 yrs ≤ 78 5 years 11 years > 15 yrs > 78 – 90.00 Cancelled at 78% LTV & 5 yrs 11 years > 15 yrs > 90.00 Cancelled at 78% LTV & 5 yrs Loan term
Upfront premiums (UFMIP) will stay the same. See more..
So What Is The Next Step?
If you will do nothing.. don’t expect anything to happen. You must bump your credit score up! It will give you better leverage when facing the lenders, and better negotiation position when applying for any financial need.
Lets not forget you are probably paying $500-$1000 extra per year in higher interest rates, and credit payments.
If your score is below 700, you might want to clean it yourself – get this ‘Credit Repair University’ which will save you money and time.
Yes, you might need to invest a small sum to get a grip of things.. But if you think education is expensive.. try ignorance..
You are probably paying thousands of dollars per year in fees and interests to credit companies which could be going straight to your pocket. Don’t be cheap when it comes to financial education.. Ignorance costs more.