Articles Tagged With: MIP (Mortgage Insurance Premiums)

September 28, 2016

FHA Loan Mortgage Insurance Premiums

Here’s a version of a common question we’ve been asked recently about FHA mortgage insurance premiums: “I closed an FHA mortgage on a house I purchased in December 2014. The following month FHA reduced the mortgage insurance premium (MIP). Can I get the lower mortgage insurance rate and a reduced monthly payment without totally refinancing my mortgage?” The FHA/HUD official site published a .pdf file that addresses this question directly. Back in 2015 the FHA lowered it’s mortgage insurance premium. The pdf states, “The reduction is effective as of January 26, 2015. Borrowers with case numbers assigned on and after January 26, 2015 will be eligible for reduced annual mortgage insurance premiums.” Note the specific date when the lower premiums become effective-borrowers who have loans prior to these dates will | more...

January 7, 2016

FHA Loan Rules For Up Front Mortgage Insurance Premiums (UFMIP)

By Joe Wallace

When you buy a home with an FHA mortgage, there’s a requirement to pay an Up Front Mortgage Insurance Premium or UFMIP. This is not to be confused with Private Mortgage Insurance (PMI), and according to the FHA loan rules published in HUD 4000.1 most FHA loans require UFMIP. “Most FHA mortgage insurance programs require the payment of UFMIP, which may be financed into the Mortgage. The UFMIP is not considered when calculating the area-based Nationwide Mortgage Limits and LTV limits.” There are exceptions as found in HUD 4000.1: –Streamline Refinance and Simple Refinance Mortgages used to refinance a previous FHA-endorsed Mortgage on or before May 31, 2009 –Hawaiian Home Lands (Section 247) –Indian Lands (Section 248) How is the UFMIP calculated? “The UFMIP charged for all amortization terms is | more...

December 24, 2015

FHA Loans And The Up Front Mortgage Insurance Premium (UFMIP)

By Joe Wallace

FHA loan rules published in HUD 4000.1 include instructions to the lender on how FHA single family mortgages are to include the Up Front Mortgage Insurance Premium, also known as UFMIP. This is an expense borrowers should plan and budget for in the pre-application phase of preparing for an FHA mortgage loan. Borrowers can choose to finance the UFMIP or pay the cost at closing time. The UFMIP is not to be confused with the monthly mortgage insurance premium, also known as MIP, or private mortgage insurance commonly called PMI. According to HUD 4000.1: “FHA collects a one-time Upfront Mortgage Insurance Premium (UFMIP) and an annual insurance premium, also referred to as the periodic or monthly MIP, which is collected in monthly installments.” Of UFMIP, the rulebook says that “most | more...

October 14, 2015

FHA Loan Mortgage Insurance Termination

By Joe Wallace

One commonly asked questions about FHA home loans involves when a borrower is permitted to terminate FHA-mandated mortgage insurance. There is a difference between FHA mortgage insurance premiums and private mortgage insurance–borrowers with questions about private mortgage insurance will need to contact the insurance provider. But for FHA mortgage insurance, there are rules in HUD 4000.1 that govern when such the coverage may be cancelled. These rules are found in Section III Part A, which includes the following: “A Mortgage Insurance Termination is the ending of FHA Single Family mortgage insurance at which time the Mortgagees obligation to remit MIP to HUD ends. Upon termination, the Borrower and Mortgagee will enjoy only those rights, if any, to which they would be entitled under the National Housing Act if the insurance | more...

June 11, 2015

FHA Policy On Cancelling Monthly Mortgage Insurance Premiums

By Joe Wallace

One commonly asked question about FHA loans involves when and how a borrower can stop paying FHA Monthly Mortgage Insurance Premiums. The information we’re discussing here does not apply to Private Mortgage Insurance, which something different than FHA Mortgage Insurance Premiums. Since we’ve mentioned Private Mortgage Insurance, borrowers who have it, (called PMI for short) should know the following as published on the government website, ConsumerFinance.gov: “The Homeowners Protection Act gives you the right to request that your lender cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage. If you | more...

January 29, 2015

Lower MIP On FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “What’s the lead time on case cancellation requests? With new case number requests?” The reader is asking about FHA loan case number cancellation requests made possible for a limited time to help qualified FHA borrowers take advantage of the new, lower annual Mortgage Insurance Premiums announced earlier this month by the FHA and HUD. We wrote about this in a blog post titled, FHA Mortgage Premium Cuts Begin Today. That article includes the following information: “On Thursday, January 8, 2014, the FHA and HUD issued a press release announcing a cut to the FHA’s required annual mortgage insurance premiums, also known as MIP. According to the press release, “As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the | more...

January 27, 2015

FHA MIP Cuts: Who Is Affected? A Reader Question

By Joe Wallace

A reader asks, “I am a homeowner with a FHA loan. I bought the house last year, I wanted to know if this will also benefit me or is just for you new perspective home owners? Thanks…” This reader question is in reference to the FHA mortgage insurance premium cut that took effect on Monday January 26, 2015. According to an FHA press release, “the Federal Housing Administration (FHA) will reduce the annual premiums new borrowers will pay by half of a percent. This action is projected to save more than two million FHA homeowners an average of $900 annually and spur 250,000 new homebuyers to purchase their first home over the next three years.” We wrote about this recently when the cuts took effect. But who is affected by | more...

January 15, 2015

FHA Loan MIP Rules: A Reader Question

By Joe Wallace

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...

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...

February 13, 2013

FHA HECM Loan Changes: When and How

By Joe Wallace

On January 30, FHA issued guidance about pending changes to the FHA Home Equity Conversion Mortgage or HECM loan program. The changes affect all FHA HECM loans for fixed rate mortgages with case numbers assigned on or April 1, 2013. According to the FHA official site, “To help sustain the HECM program as a viable financial resource for aging homeowners and to strengthen the Mutual Mortgage Insurance Fund, the HECM Saver will be the only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” This, according to FHA Mortgagee Letter 2013-01, requires the lender to “designate HECM Saver as the initial MIP and use the HECM Saver principal limit factors to determine the amount of funds available to | more...