FHA mortgage insurance premiums on the rise…again

You may remember that HUD increased monthly mortgage insurance premiums on FHA loans last year in an effort to shore up finances for the FHA insurance poll.  Unfortunately, HUD is at it again.  Beginning with FHA case numbers assigned after April 17, 2011 monthly mortgage insurance premiums will be going up .25% for 30 year mortgages and .50% for 15 year mortgages.  HERE is a link to download the mortgagee letter in case you want to read the news directly from the source.

What does this mean for homebuyers?  It means monthly payments will rise.  On a hypothetical purchase of  a home for $215,000 the total monthly “PITI+MI” payment would increase from $1,509 to $1,552; an increase of $43 per month.

To avoid this change homebuyers would have to be in contract to buy a home a couple days before April 17th so that the lender could register the loan with HUD prior to the change.  The upfront mortgage insurance premium that gets financed into the loan amount would remain unchanged at 1.00%.