FHA Loans MIP Change Coming April 2011
In February we let you know about a couple changes to FHA loan requirements that will be happening in April 2011. Now that April is right around the corner we wanted to remind you about these changes as they could have a dramatic impact on how much MIP you could be paying on your FHA loan .
On April 18, 2011, the FHA monthly insurance premium (MIP) will be rising. MIP is required on most FHA loans for the first five years. Under the new MIP changes, you’ll pay an extra $42/month on a $200,000 mortgage. Over 5 years you could be paying an extra $2,520 if you apply for an FHA loan after April 18! The changes are even more dramatic if you want to get a 15-year FHA loan. Currently, if you owe less than 90% of the value of your home you will not owe any MIP on a 15-year FHA loan. After April 18, you would have to pay MIP for 5 years or until
the loan amortizes to 78% – whichever is longer.
Even with this increase, there are still a lot of reasons to get an FHA loan. They are great loans for first time home buyers or those with less than 20% to put towards a down payment. Additionally, if you have an FHA loan, you can refinance with the FHA streamline – a fast way to lower your rate and payment even if you owe more than your home is worth!
If you’re thinking about buying a home or refinancing with an FHA loan, it’s crucial that you speak to a Home Loan Expert before April 18, 2011. This is the second increase in MIP in less than a year. The cost of FHA loans are going up. Be sure to lock-in before these latest changes take effect!
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