In a memo released on Thursday, FHA commissioner David Stevens announced that it is their intention to make changes to the current mortgage insurance fees effective with new case numbers ordered on September 7, 2010. The upfront mortgage insurance premium will decrease to 1% while the monthly premium will rise to .85-.90%. Final details will be release once President Obama signs the bill into law.
Currently a 30 year loan has an upfront MIP of 2.25% with a monthly premium of .55% (FHA waives the monthly mortgage insurance for all 15 year loans with a loan-to-value at or below 90%). Without more details it is hard to compare the changes at this time but it would not seem logical that the change is an overall increase in fees.
A case number is requested from FHA once a property is identified by the borrower. If you are looking for a home or thinking about refinancing now maybe the time to act. Mr. Stevens also notes that he hopes congress will act on additional legislation after congress returns from their August recess. Another major change in that piece of legislation is lowering the maximum amount that a seller's can pay toward a buyers closing cost (seller's concession) from 6% to 3% of the sales. Fannie Mae and Freddie Mac have already made this change to conventional loans.
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