HUD's Required Lender Protection
Mortgage insurance is a policy that protects lenders against losses that result from defaults on home mortgages. FHA requirements include mortgage insurance primarily for borrowers making a down payment of less than 20 percent.
Annual Mortgage Insurance Premium
President Obama signed a bill in August of 2010 giving HUD the flexibility to increase Annual Mortgage Insurance Premiums. Under the law, effective as of October 4th, 2010, HUD is allowed to increase the amount of the Annual Mortgage Insurance Premium from .5% to 1.5% on loans with a down payment of 5% or more. The Insurance Premium on loans with less than 5% down payment increases from .55% to 1.55%.
HUD is not implementing the maximum amount at this time. As of October 4th, 2010, loans with a down payment equal to or greater than 5% will be charged an Annual Premium of .85% and loans with a down payment of less than 5% will be charged .90%.
Upfront Mortgage Insurance Premium
Effective for loans on or after October 4th, 2010, for FHA regular purchases and refinance products, the Upfront Mortgage Insurance Premium is 1.00%, which is decreasing from 1.5%.
FHA's monthly mortgage insurance payments will be automatically terminated when these conditions occur:
•For mortgages with terms more than 15 years, the annual mortgage insurance premiums will be canceled when the Loan to Value ratio reaches 78%, provided the mortgagor has paid the annual premium for at least 5 years.
•For mortgages with terms 15 years and less and with loan to value ratios 90% and greater, then annual premiums will be canceled when the Loan to Value ratio reaches 78%, regardless of the amount of time the mortgagor has paid the premiums.
•Mortgages with terms 15 years and less and with loan to value ratios of 89.99% and less will not be charged annual mortgage insurance premiums.
About Me
- Effective Mortgage Company
- Northridge, CA, United States
- We are a full service mortgage brokerage with experience in the areas of mortgage lending, real estate and business. Our company has established relationships with many mortgage investors and banks to provide the best programs for your individual circumstances. We specialize in Conventional, Goverment, Investment, and Reverse Mortgage. We are experts regarding any FHA or VA (veteran) questions you may have. Post any questions or feel free to call our office 818-773-0033. If our clients don't fit into one of the many loan programs offered we promise to help them overcome the roadblocks that can stop them from securing a loan. When purchasing we suggest always getting a pre-approval early on to have ease of mind knowing what amount you will qualify for and make the loan process as smooth as possible.
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