More FHA Mtg Insurance Changes

FHA mortgage insurance has become just like that celebrity that you’ve watched change from FHA Mortgage Insurance Changes 2013
their first hard to watch performance to their most recent amazing blockbuster hit.  You have  noticed subtle changes in the actor’s appearance through the years in each movie.  It is slight  enough to shrug it off to maybe a new haircut and aging. Then your favorite network hosts a back  to back run of the actors best movies.  As you watch the ending credits of the actors first movie roll  into the opening credits of the stars latest release you notice the massive face-lift and multiple plastic surgeries have made the new version of the celebrity almost unrecognizable compared to the younger version.

Well, that is about how FHA’s mortgage insurance policy has evolved.  Today’s FHA mortgage insurance looks nothing like FHA mortgage insurance from years back.  The second round of 2 significant FHA mortgage insurance changes announced in early 2013 is slated for this coming Monday June 3rd.

What is Changing with FHA?

Below is a snippet from an article I posted on the blog few months back outlining the June 3rd FHA Mortgage Insurance Changes:

– from 2013 FHA Mortgage Insurance (posted February 5th 2013)

FHA Mortgage Insurance Changes effective June 3rd, 2013:

CHANGE 1: Elimination / Revision of the ability of an FHA buyer to naturally eliminate monthly mortgage insurance payments (effective for case numbers assigned on or after June 3rd, 2013):

1. 30 Year FHA Loan with less than 10% down (Most Common Scenario):
Current mortgage insurance elimination period: 5 years & 78% loan to value   
New mortgage insurance elimination period: Loan Term (which means it never goes away naturally/buyer must refi to Conventional)

2. 15 Year FHA Loan with less than 10% down:
Current mortgage insurance elimination period: 78% loan to value   
New mortgage insurance elimination period: Loan Term (which means it never goes away naturally/buyer must refi to Conventional)

CHANGE 2: Increase to an FHA buyer’s monthly mortgage insurance costs:

1. 15 Year FHA Loan with less than 22% down:
Current annual rate for FHA Monthly Mortgage Insurance: .0%
New annual rate for FHA Monthly Mortgage Insurance: .45%
This change increases the monthly mortgage insurance payment on a 15 year FHA loan equal to $250,000 by $93.75 per month (old mo mi pmt: $0/new mo mi pmt: $93.75) 

For more on the rest of the FHA Mortgage Insurance taking place in 2013 click HERE

FHA Still a Good Option For Some Buyers

There is no hiding the fact that an Arizona FHA mortgage has become less desirable as FHA mortgage insurance costs have risen and the ability to eliminate FHA mortgage insurance has evaporated.  FHA still offers the following benefits to Arizona home-buyers:

1. More lenient debt to income ratios allowing borrowers to borrow more than on many other mortgage options
2. More lenient credit score requirements (FHA allows lower credit scores)
3. Shorter post Bankruptcy, Foreclosure and Short Sale waiting time frames than many other mortgage options
4. Lower down payment requirements than many other home loan options

While an Arizona FHA home loan may not be a buyer’s first choice, it may be their only choice and may allow them to achieve their dream of home ownership! .

Call or email us today to see if FHA is right for you and also to find out what FHA alternatives may be available to you.

By Jeremy House

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