Articles Tagged With: FHA MIP

January 15, 2015

FHA Loan MIP Rules: A Reader Question

A reader asks, “When calculating the annual PMI, are the bps assessed against the original loan amount or the current pay-off amount of the loan?” Assuming the reader is asking about annual FHA Mortgage Insurance Premiums, and not monthly Private Mortgage Insurance, it’s important to know the following: When the FHA and HUD announced a reduced annual Mortgage Insurance Premium, it created a table showing how the new Mortgage Insurance Premium (MIP) is calculated. FHA MIP is calculated, according to the FHA/HUD official site, by “amortization term, base loan amount and Loan to Value (LTV) ratio.” Here is the table published by the FHA showing the new FHA MIP rates: As you can see, there is a listing for the previous FHA MIP payment and the new FHA MIP payment. | more...

January 14, 2015

FHA Loan MIP Changes: Does My FHA Home Loan Qualify?

By Joe Wallace

A reader asks, “I just got an FHA loan last May. Do I qualify for a reduction when it happens?” This question comes in reference to our previous blog post discussing the FHA announcement that annual FHA mortgage insurance premiums would be reduced in 2015, amounting to a savings as much as approximately $900 per year (according to a speech by President Barack Obama). Our post, “FHA Announces Mortgage Premium Cut” included the following details on the new FHA policy: “An FHA/HUD press release (HUDNo. 15-001) announced the change, which could take effect as early as the end of the month. According to the release, ‘As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration (FHA) will reduce | more...

January 10, 2015

FHA Clarifies Mortgage Insurance Premium Cuts

By Joe Wallace

When the FHA announced mortgage insurance premium cuts in the annual, mortgage insurance premium (MIP), there was a preliminary announcement on Thursday January 8th, with details promised to follow. Now the FHA has issued a Mortgagee Letter announcing specifics of those MIP cuts. FHA Mortgagee Letter 2015-01 states, “This Mortgagee Letter (ML) communicates revised annual MIP rates for FHA Title II forward mortgages and provides opportunity for cancellation of existing case numbers in order to utilize the MIP rates contained in the ML.” The new rules are effected for FHA loan case numbers assigned on or after January 26 2015. According to the mortgagee letter, the new FHA policy “reduces the rate for annual MIP for all Title II forward mortgages, with terms greater than 15 years, except; –single family forward streamline | more...

January 9, 2015

FHA Announces Mortgage Insurance Premium Cut

By Joe Wallace

Some homeowners who purchased homes with FHA loans could save as much as $900 a year thanks to a reduction in the FHA mortgage insurance premium announced by the FHA and HUD. An FHA/HUD press release (HUDNo. 15-001) announced the change, which could take effect as early as the end of the month. According to the release, “As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration (FHA) will reduce the annual premiums new borrowers will pay by half of a percent.” Half a percent may not sound like a lot to some, but according to the FHA official site, that half-percent reduction “is projected to save more than two million FHA homeowners an average of $900 annually | more...

January 6, 2015

FHA MIP Refunds Part Two: Exceptions

By Joe Wallace

In a recent post, we discussed a reader question about FHA Mortgage Insurance Premiums and the refunds that may be due some FHA borrowers at loan payoff time. The reader asked, “I like to know why FHA MIP don’t send any refund after pay off of my FHA loan pay off 4 months ago.” We replied that FHA borrowers, “may or may not be eligible for a mortgage insurance premiun refund depending on circumstances, but assuming the reader is eligible for a refund, consider the advice found on the FHA official site at www.FHA.gov:” “If you do not receive a check or an application within 45 days after you have paid off your loan, check with your mortgage company to confirm that they have sent HUD a request to terminate the | more...

December 4, 2014

FHA HECM Loan Changes: MIP

By Joe Wallace

We have covered a great deal of information regarding the recent changes to the FHA’s Home Equity Conversion Mortgage (HECM) program. One crucial area borrowers should be aware of included in these changes? HECM MIP rules. The mortgage insurance premium rules for FHA HECM loans now reflects an MIP percentage that varies depending on how much the borrower’s initial disbursement amount is. FHA Mortgagee Letter 2014-21 states: “HUD charges an initial MIP of 0.50 percent (0.50%) of the Maximum Claim Amount (MCA) when the mortgagor’s Initial Disbursement Limit or the Borrower’s Advance is 60% or less of the Principal Limit. HUD charges an initial MIP of 2.50 percent (2.50%) of the MCA when a mortgagor’s Initial Disbursement Limit or the Borrower’s Advance is greater than 60% of the available Principal | more...

October 7, 2014

FHA Loan MIP Rules: A Reader Question

By Joe Wallace

A reader asks, “We acquired FHA loan last April 2010 and refinanced it twice. Our original loan was 410k and our current bal is 383k. How can we eliminate the MIP and loan APR is 3.25%.” Last year, FHA Mortgagee Letter 2013-04 announced changes to FHA loan policy for mortgage insurance premiums. That policy was altered to require MIP payments for the maximum duration allowed by law on FHA loans. According to the FHA official site: “For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. See 12 U.S.C. § 1709(c)(2)(B).” “For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP) less than or | more...

What you should know about FHA 203(h) Loans For Disaster Victims

September 30, 2014

FHA Mortgage Insurance: A Reader Question

By Joe Wallace

A reader asks, “Mortgage companies have kept sending letters/emails, saying ‘You no longer pay MIP because FHA MIP policy has been changed since May 2014. You have paid unnecessary MIP payments because since you has refinanced for your home 2012.'” “I refinanced my home mortgage through FHA in Mar.2012 and since then I have paid MIP until principal reach less than 78%. It will be by 2019 according to my mortgage company. Can you clarify ‘Revision of Federal Housing Administration (FHA) policies concerning cancellation of the annual Mortgage Insurance Premium (MIP) and increase to the annual MIP’? Dose cancellation of MIP mean ” home buyers who apply finance through FHA do not need to pay MIP? Should I stay with my current mortgage or refinance?” This reader question refers to | more...

September 26, 2014

FHA Mortgage Insurance Premiums: A Reader Question

By Joe Wallace

A reader asks, “I am purchasing a second home using a FHA loan. Why is it necessary to pay for FHA insurance for the length of the loan it is a 30 year fixed mortgage?” While we can’t speculate what the FHA/HUD motivation for changing the FHA MIP requirement for 30 mortgages, we can reiterate FHA loan policy on the matter, which changed back in January 2013. In a Mortgagee Letter (FHA ML 2013-04) FHA loan policy for mortgage insurance premiums changed to require MIP payments for the duration of a 30-year FHA loan. According to the FHA official site: “For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. See 12 U.S.C. § | more...

August 27, 2014

FHA Eliminates Post-Payment Interest Charges

By Joe Wallace

The FHA has announced the elimination of certain interest payments previously owed beyond the date the FHA mortgage was paid in full. According to the press release HUDNo.14-104, titled, “FHA To Eliminate “Post Payment” Interest Charges, “borrowers who prepay their FHA-insured mortgages will not have to make interest payments beyond the date their mortgage is paid in full.” A new FHA rule known as “Handling Prepayments: Eliminating Post-Payment Interest Charges”, will apply for FHA mortgages closed on or after January 21, 2015. According to the press release, the new rule, “explicitly prohibits lenders from charging borrowers post settlement interest, which is broadly defined as a ‘prepayment penalty’ by the Consumer Financial Protection Bureau (CFPB), for all FHA Single Family mortgage products and programs.” This is an important development for borrowers | more...