Cost of San Francisco Bay Area FHA Mortgages Set To Rise In April

Cost of San Francisco Bay Area FHA Mortgages Set To Rise In April

Beginning April 1, 2012, the FHA is once again raising mortgage insurance premiums (MIP) on FHA purchases, FHA refinances for its newly-insured borrowers throughout the San Francisco  Bay Area and the country.

The Cost of FHA Continues North

It’s the FHA’s fourth such increase in the last two years.

Beginning April 1, 2012, upfront mortgage insurance premiums will be higher by 75 basis points, or 0.75%; and annual mortgage insurance premiums will be higher by 10 basis points per year, or 0.10%.

For example, if you live in San Francisco, California and you borrow up to the FHA’s local loan limit of $729,750, your upfront mortgage insurance premium will rise 75% from $7,295 to $12,771. This amount is added to your loan size. FHA upfront MIP is not paid via cash. You’ll pay interest on this amount for the life of your loan.

The changes in the FHA’s annual mortgage insurance premiums are less extreme, rising only 10 basis points.

The new schedule, for loans with case numbers assigned on or after April 1, 2012 :

15-year loan terms with loan-to-value over 90% : 0.60 percent annual MIP

15-year loan terms with loan-t0-value under 90% : 0.35 percent annual MIP

30-year loan terms with loan-to-value over 95% : 1.25 percent annual MIP

30-year loan terms with loan-to-value under 95% : 1.20 percent annual MIP

Furthermore, all FHA mortgages made for $625,500 or more will be subject to an additional 0.25 percent annual mortgage insurance fee.

Pleasanton, CA FHA High Balance Loan

A Pleasanton, California homeowner, therefore, using the FHA’s full $729,750 local loan limit for a low-downpayment, 30-year fixed rate mortgage will pay annual mortgage insurance premium of 1.50% to the FHA, or $912 per month.

Loans made prior to April 1, 2012 will use the old FHA mortgage insurance schedule :

15-year loan terms with loan-to-value over 90% : 0.50 percent annual MIP

15-year loan terms with loan-t0-value under 90% : 0.25 percent annual MIP

30-year loan terms with loan-to-value over 95% : 1.15 percent annual MIP

30-year loan terms with loan-to-value under 95% : 1.10 percent annual MIP

There is no “jumbo FHA mortgage premium” for loans made prior to April 1, 2012.

All new FHA loans are subject to the increase — purchases and refinances.

The FHA is increasing its mortgage insurance premiums because, as an entity, the FHA is insuring a much larger percentage of the U.S. mortgage market than ever before.

In 2006, the FHA insured 2 percent of all purchase-money mortgages. In 2011, that figure jumped to 18 percent. Unfortunately, as the FHA has insured more loans, it’s number of loans in default have climbed, too, forcing the FHA to boost its reserves.

Beginning April 1, 2012, the new FHA annual mortgage insurance premium schedule is as follows :

  • 15-year loan term, loan-to-value > 90% : 0.60% MIP per year
  • 15-year loan term, loan-to-value <= 90% : 0.35% MIP per year
  • 30-year loan term, loan-to-value > 95% : 1.25% MIP per year
  • 30-year loan term, loan-to-value <= 95% : 1.20% MIP per year

In order to calculate what your FHA annual mortgage insurance premium would be on a monthly basis, multiply your beginning loan size by your insurance premium in the chart above, then divide by 12.

In addition, for loans over $625,500, beginning June 1, 2012, there is an additional 25 basis point increase to annual MIP.

To avoid paying the new FHA mortgage insurance premiums, start your FHA mortgage application today. Existing FHA-insured homeowners will not be affected by the change.

Mortgage insurance premiums will not rise for loans already made.

Lock Your FHA Mortgage Rate Before the Change

I love to work with readers that find my information on the Mortgage and Housing Market helpful in your decision making process. As a Mortgage Planner at Vintage Mortgage Group in Pleasanton I am in a unique position to help you capitalize on historically low interest rates in 2012. Contact me below today to help you with your purchase or refinance.

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