Changes in FHA Loan Requirements
August 10, 2010
In the past several years the FHA insured loan has become a loan of choice. In the initial years of this 21st century, lenders developed alternate financing options with low down payments and no monthly insurance premiums were required with the 80% first trust deed and the 10 or 20% equity second. (This is probably one of the reasons we do not see many HUD foreclosed properties for sale.) However, we the financial crisis and the demise of the exotic loan products, FHA loans are once more the loan of choice for many home buyers.
This year has seen the Department of Housing and Urban Development raise the upfront premiums for mortgage insurance from 1.75% to 2.25% in April. This percentage is calculated on the amount of the loan being insured. This change in the upfront premium had a dampening effect of the number of loans being processed.
IN February HUD had promise that it would roll back the up front premiums if Congress would give it authority to raise the annual premiums instead. Legislation to do just this was passed by the House on July 30 and approved by the Senate on August 4. The legislation raised the cap on annual premiums from .55% to 1.55%. Last week, FHA commissioner, David Stevens announced that upfront premiums would be reduced to 1.25%.
If all this number manipulation has your head spinning, be sure when you speak with your loan agent that you obtain clarification of these mortgage insurance premium costs. They are scheduled to go into effect on September 7, 2010.
The FHA has a website that is helpful in explaining the FHA requirements. it is http://www.fha.com/
In the past several years the FHA insured loan has become a loan of choice. In the initial years of this 21st century, lenders developed alternate financing options with low down payments and no monthly insurance premiums were required with the 80% first trust deed and the 10 or 20% equity second. (This is probably one of the reasons we do not see many HUD foreclosed properties for sale.) However, we the financial crisis and the demise of the exotic loan products, FHA loans are once more the loan of choice for many home buyers.
This year has seen the Department of Housing and Urban Development raise the upfront premiums for mortgage insurance from 1.75% to 2.25% in April. This percentage is calculated on the amount of the loan being insured. This change in the upfront premium had a dampening effect of the number of loans being processed.
IN February HUD had promise that it would roll back the up front premiums if Congress would give it authority to raise the annual premiums instead. Legislation to do just this was passed by the House on July 30 and approved by the Senate on August 4. The legislation raised the cap on annual premiums from .55% to 1.55%. Last week, FHA commissioner, David Stevens announced that upfront premiums would be reduced to 1.25%.
If all this number manipulation has your head spinning, be sure when you speak with your loan agent that you obtain clarification of these mortgage insurance premium costs. They are scheduled to go into effect on September 7, 2010.
The FHA has a website that is helpful in explaining the FHA requirements. it is http://www.fha.com/
posted by shirley harry at 7:56 AM
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