2013 FHA Home Loan Guidelines
FHA has announced a major change to its loan program which allows borrowers to cancel the mortgage insurance premium (MIP) when the unpaid balance reaches 78% of the purchase price. While no specific date has been set, in 2013, new FHA loans will require the mortgage insurance for the life of the loan
What does this mean? That you have until about mid 2013 to close on your home before FHA requires Mortgage Insurance for the life of the loan. At existing rates, the monthly Mortgage Insurance on a $168,875 mortgage is $178.99 per month. Under the current rule the MIP would no longer be required after the loan to value rate is 78% or less, which can be achieved in 5 years if you make some extra payments. However, under the new rule, it would last for the entire 30 year term.This will cost you over $53,000 over the course of the loan.
They also announced that the annual MIP will also be increased from 1.25% to 1.35% at some point in the near future. HUD, the parent agency for FHA, is making the changes to restore the capital reserves of the program that are needed to fund failed loans.
People that can close a FHA loan before the change takes place will fall under the old rules for canceling MIP and the lower rates. Since no date was announced, it is not known exactly when the changes will take effect.
While this information will probably not make the evening news, it will have a big impact on borrowers planning to use an FHA or VA loan.
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