Articles in Category: Mortgage Insurance

January 2, 2012

Reader Question: FHA Up Front Mortgage Insurance Premiums

A reader question about FHA mortgage insurance premiums came in over the weekend, asking about how the FHA calculates MIP. The reader asks, “Is there some way to calculate how much the FHA insurance will cost based on the price of the home?” The technical answer to this question is that there’s no way to base the FHA Mortgage Insurance Premium on the price of the home alone–the loan amount (more specifically, the loan-to-value percentage) is used to determine the MIP, and the loan amount could include other items such as permissible closing costs, etc. That aside, when it comes to how to calculate the MIP, there’s more than one answer because of the nature of FHA mortgage insurance premiums. The FHA loan Up Front Mortgage Insurance Premium, or UPMIP, | more...

October 3, 2011

FHA Mortgage Insurance Premiums

By Joe Wallace

Earlier in 2011 we reported a change to FHA Mortgage Insurance Premiums–according to FHA Mortgagee Letter 11-10, a scheduled increase in Annual Mortgage Insurance Premiums took effect for all FHA loan case numbers dated on or after April 18th 2011. The change was an increase in the annual premium for FHA loan terms of: –Greater than 15 years–Equal to or less than 15 years For FHA mortgage loans with greater than 15 year terms, the new MIP amount depends on the down payment. If the down payment is equal to or greater than 5%, the new Annual Premium is 110 basis points (bps). If the down payment is less than 5%, the new Annual Premium is 115 basis points (bps). FHA instructions for loans equal to or less than 15 | more...

August 16, 2011

FHA Mortgage Insurance Premiums: Are They Tax Deductible?

By Joe Wallace

Successful home ownership requires borrowers to become more financially savvy in several ways; one of those ways is finding any possible way to save money as a home owner. FHA borrowers often invest in energy-efficient upgrades, modern insulation, even solar heaters. Refinancing an FHA home loan to lower the interest rate is another way to save, and for some homeowners tax legislation could help improve the bottom line even more. Some borrowers are now eligible to deduct some of their FHA mortgage insurance premiums on federal income tax returns. According to the FHA official site, FHA loan applicants who closed their transactions between 2007 and 2010 may be eligible based certain conditions spelled out in IRS rules. The FHA official site states, “Legislation was recently passed to make FHA mortgage | more...

May 3, 2011

FHA Mortgage Insurance Premiums–When Do They Stop?

By Joe Wallace

FHA loan applicants have many things to budget and plan for. Mortgage insurance is one of the costs associated with a home loan, and FHA loan applicants are required to pay an annual mortgage insurance premium. The reason for mortgage insurance is to protect the lender against a loss associated with a default/foreclosure on the home. An FHA borrower making a down payment of less than 20% is required to carry mortgage insurance. But borrowers should know that mortgage insurance isn’t required for the entire term of the loan. The insurance is automatically terminated based on the nature of the loan, the length of the loan term and the Loan to Value ratio or LTV. According to the FHA official site, for all FHA mortgages closed after January 1, 2001, | more...

April 15, 2011

Does the FHA Owe You Money?

By Bruce Reichstein

Does the FHA owe you money? Some are led to believe so based on third-party advertising on television, the Internet, direct mail and via telemarketing calls, but should you believe these advertising efforts? According to the FHA, there’s a very simple way to determine whether the FHA owes you money; “If you had an FHA-insured mortgage, you may be eligible for a refund from HUD/FHA”, FHA.gov says, explaining that some borrowers are owed a partial refund of mortgage insurance premiums under the right circumstances. Only borrowers who have loans originated after September 1, 1983, paid up-front mortgage insurance at closing time and most importantly, did not default on mortgage payments are eligible to get this refund money.

April 5, 2011

FHA Home Loan Flood Insurance Rules

By Joe Wallace

In March 2011, FHA rules changed for properties located in special flood zones or near coastal areas. In the past, the FHA had “strongly encouraged” mortgagees to get a flood zone determination independent of any appraisal; now FHA rules make flood zone determination a requirement for properties. FHA Mortgagee Letter 2010-43 says “FHA now requires that all Mortgagees obtain a flood zone determination on all properties instead of strongly encouraging such action.” FHA adds, “lenders are now “required to obtain life-of-loan a flood zone determination services, certification independent of any assessment made by the appraiser…” Flood zone determination can affect a property’s eligibility for an FHA loan, depending on the circumstances. For example, you may be able to apply for an FHA insured mortgage on a home in a special | more...

March 7, 2011

FHA Refund Facts

By Joe Wallace

When purchasing a home with an FHA loan, one of the requirements is to pay an Up Front Mortgage Insurance premium or UFMIP. FHA mortgage loan applicants must budget for both an UFMIP and a monthly mortgage insurance payment that goes towards the annual Mortgage Insurance Premium. After a certain amount of time, some borrowers may be eligible for an FHA mortgage insurance premium based on a set of qualifying factors from the FHA. FHA Refund Fact—FHA borrowers may be eligible for a partial refund of their insurance premium if the loan closed after September 1, 1983 AND UFMIP was paid at closing time. FHA Refund Fact–this refund is available only to those who meet the qualifying criteria listed above AND who did not default on mortgage payments at any | more...

March 3, 2011

FHA Mortgage Insurance Annual Premium Increase

By Joe Wallace

Starting with FHA loans with case numbers assigned April 18, 2011, the FHA annual mortgage insurance premium will increase. At the time of this writing, no increases in the FHA Up Front Mortgage Insurance Premium are planned, but new borrowers will have the annual mortgage insurance calculated with an additional 25 “basis points”. FHA loan mortgage insurance is calculated using basis points, which vary depending on the type of loan being applied for based on the loan-to-value ratio. The annual insurance rate is calculated by taking the base mortgage (sale price of the home minus the down payment) and multiplying it by the basis points. While an increase of 25 basis points may sound like a lot to those new to the FHA loan process, a mortgagee letter from the | more...

January 25, 2011

FHA Loans: How Many Payments Can Be Missed Before Foreclosure Starts?

By Joe Wallace

When FHA borrowers get into financial trouble, the best thing to do is to get in touch with the FHA and the lender immediately to start damage control. This helps avoid the borrower going into default or foreclosure on the FHA loan. Some borrowers mistakenly think that they are in foreclosure territory after missing one or two payments--but many more wrongly believe they have much more time even after missing two or more payments before the foreclosure proceedings start. The truth is that the foreclosure often varies depending on the state and the lender. How much time does a borrower have before going into default and foreclosure in general?

January 10, 2011

FHA Warns About Mortgage Insurance Refund Scams

By Joe Wallace

As discussed in our last blog post, some FHA borrowers are eligible for refunds on their mortgage insurance premiums under the right circumstances. A small service industry has sprung up where third-party companies contact FHA mortgage holders, offering to locate these refunds for a fee. The FHA has hired a company called Immediate System Resources to locate FHA loan holders the government owes money to, but there is no fee. In fact, FHA borrowers never have to pay to get information about or payment from the FHA connected to mortgage insurance premium refunds.