March 3, 2011
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 FHA explaining the change states, “It is anticipated that this increase will have minimal impact on
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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