FHA changes October 2010

With the increase in monthly MMI, please notice the difference between 15 and 30 year financing. Historically Automated Underwriting Systems have been more favorable toward 15 year financing, and the savings incurred by lower Monthly MMI expenses may bridge the gap in payment differences.

FHA publishes MIP (Mortgage Insurance Premiums) changes:  http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-28ml.pdf

Main points:

~ Effective for case numbers assigned on or after October 4th, the new MIP structure will be implemented.

~ Upfront premium will be 1% for all forward mortgages (purchases and refinances including streamlines)

~Annual premium (note the calculation Monthly Insurance Premium has changed as follows)

  Over 15 year terms

     90 bps for LTVs over 95%

     85 bps for LTVs of 95% or less

  15 year term or less

    25 bps for above 90% LTV

No annual premium for 90% LTV or less

FHA publishes LTV/Credit Score changes

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-29ml.pdf

Main points:

~ Effective for case numbers assigned on or after October 4th, there will be new minimum credit scores in place 

~ 580 FICO required for maximum financing (96.5% Purchase, 99.5% Access) 

~ 500-579 FICO limited to 90% LTV 

~ Less than 500 FICO ineligible for FHA financing 

~ Non-traditional Credit still eligible for maximum financing (96.5% Purchase, 99.5% Access) 

~ Insufficient Credit still eligible for maximum financing (96.5% Purchase, 99.5% Access)

When selecting the right loan, as a Mortgage Broker, I consider and review hundereds of variables before I educate my clients on their options. ~ Jay