The FHA is having it both ways. Follow along and I’ll try to explain. First, the FHA notifies its brokers and lenders on February 27th that it will increase the premium structure on new loans for single family homes. The new structure will take effect on FHA cases assigned on or after April 1, 2012. The details asset forth in the release are that the annual mortgage insurance premium (monthly) will go up by 0.10% for loans under $625,000.00 and by.35% for loans over $625,000.00. The upfront premium (payable at closing) will increase by .75%. Purchasers who initiate FHA loans after April 1 will have to pay more to FHA at time of closing and slightly more in their monthly mortgage payment. While probably not a deal breaker in most instances, for those buyers who are tight on funds and qualifying, they should consider getting under contract and making loan application prior to April 1. FHA states that the increase is to bolster their reserves, which is understandable given the numbers of foreclosures, which FHA has insured.
On the other hand, FHA is agreeing to reward current FHA borrowers who may be considering refinancing. In the industry there is a type of FHA refinance called a streamline whereby the borrower can lower his or her monthly payment by lowering the interest rate, without the need for an appraisal, and a minimum credit check. If the borrower has been current and wants to go the streamline route, FHA is agreeing to lower the upfront mortgage premium required by 0.10% and lower the monthly premium by 0.55%. With 3.4 million mortgages, which have been endorsed on or before May 31, 2009 above five percent in interest, this is a huge concession to allow faithful borrowers to lower their payments with little or no cost.
Confused? Don’t be. It appears that FHA is trying to keep the responsible borrowers in the fold while charging a little more for those joining the club.
If you have questions, the Maryland real estate insurance experts at Colony Title Associates can be reached by calling 410 884-1160 or visit ColonyTitle.com today!
About Colony Title Associates:
Founded in 1995, Colony Title Group handles in excess of 2000 real estate closings per year in the central Maryland area. The founder Tee Tillman has over 23 years experience in the title and real estate law fields. Colony handles closings for several lenders, including banks, credit unions and mortgage brokers. Colony is the preferred choice for many real estate brokers in the area.
Colony Title specializes in real estate title insurance, real estate settlement services, and real estate closings in Baltimore, Columbia, Maryland, Washington DC, and Virginia. Our staff consists of licensed Title Insurance Agents, Real Estate Agents, Settlement Processors, & Attorneys to handle all of your real estate needs.