With the passing of H.R. 5981 and the resulting Public Law 111-229, FHA was given authority to change the amount charged to borrowers for both the Up Front and the Annual premiums. These changes as outlined in Mortgagee Letter 2010-28, are effective for all case numbers assigned on or after October 4th, 2010.
Here are the 7 things you need to know about these changes:
The Up Front premium is now 1.0 % for all standard FHA programs (purchase money mortgages, full credit-qualifying refinances, streamline refinances)
The Annual premium is now .90% for LTVs GREATER than 95% on 30 year loans
The Annual premium is now .85% for LTVs EQUAL to or LESS than 95% on 30 year loans
The Annual premium is now .25% for LTVs GREATER than 90% on 15 year loans
The Annual premium is now .00% for LTVs EQUAL to or LESS than 90% on 15 year loans
These premiums apply to purchases, regular refinances and streamlines
This WILL increase the monthly payment for all the FHA borrowers.
Please note that this new law also gives FHA the authority to raise the Annual premium at will up to 1.5% for LTVs at or below 95% and 1.55% for LTVs more than 95%.
FHA is still a wonderful loan program and offers homeownership to many buyers. It will continue to be the main source (currently 41%) of loans originated in Oregon.
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