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FHA Loan changes affect the Colorado Springs real estate market
Colorado Springs Real Estate News — FHA Loan changes will affect buyers and sellers
Currently over 25% of home buyers use FHA loan to purchase their home in Colorado Springs
For a free Buyers Guide, Email Kathy Torline at KTorline@msn.com
Related Article:
The Department of Housing and Urban Development set forth a legislative mandate in Section 202 of the National Housing Act for ensuring that FHA’s Mutual Mortgage Insurance Fund remains financially sound. As part of these changes, and in an attempt to strengthen their financial position, there is a mandated increase in the Annual Mortgage Insurance Premiums for case numbers dated on or after April 18, 2011.
At first glance these changes may not seem like much. But due to the significant increase in the Annual Mortgage Insurance Premium from .55% in April 2010 to 1.15% in April 2011, it definitely decreases your buying power
What is Mortgage Insurance?
When buyers are approved for FHA home loans, they are required to carry mortgage insurance. That includes both a Mortgage Insurance Premium (MIP) and an Up Front Mortgage Insurance Payment (UFMIP). The Upfront Mortgage Insurance Premium payments go into an escrow account set up by the U.S. Treasury Department and the funds are used to protect the government in case the borrower defaults on the FHA loan.
Here’s a summary the major differences on a $250,000 FHA loan during the last year
- In April 2010, the FHA Up Front Mortgage Insurance Premium (UFMIP)was 2.25% and the Mortgage Insurance Premium (MIP) was a factor of .55%.
- In October 2010, The FHA UFMIP changed to a flat fee of 1%, but the MIP increased to .9% annually.
- Beginning April 2011, the FHA UFMIP will continue at a flat fee of 1%, but the MIP will increase again to an annual factor of 1.15%.
Portions of this article were furnished by Bev Cresswell with Academy Mortgage in Colorado Springs
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Kathy (719-287-1049) KTorline@msn.com
FHA Loan Changes
FHA Loan Changes
For a free Buyers Guide, Email Kathy Torline at KTorline@msn.com
Related Article:
Did you know that in 2009, the Federal Housing Administration (FHA) insured nearly 30% of the single-family mortgage market and that more than 50% of all first-time home buyers used FHA programs? I haven’t been able to find any facts to support this, but I think 
number if lower for homebuyers in Colorado Springs, as many of the military population relocating to Colorado Springs use VA Loans to finance their purchases.
As of April 5, 2010, FHA loans changed their upfront mortgage insurance premium from 1.75% to 2.25% of the loan amount. Additionally, an annual MIP (mortgage insurance premium) of 0.55% of the loan is charged on a monthly basis. These measures are intended to help the FHA better manage its risks, while continuing to provide affordable, responsible mortgage products. The annual MIP is automatically eliminated when the loan amount is reduced to 78% of the original purchase amount.
There have been several other changes including a reduction in maximum seller contributions from 6% down to 3%.
Another change is that new borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. Borrowers with less than a 580 FICO score will be required to put down at least 10%.
If you want to read the complete Press Release from HUD, here a link to the article.
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Kathy (719-287-1049) KTorline@msn.com
Why do I have to pay mortgage insurance?
Colorado Springs Vintage Homes is happy to feature a great article by
Harry Venik with Adams Mortgage, LLC in Colorado Springs
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Why Pay Private Mortgage Insurance (PMI)?
Private Mortgage Insurance (PMI) is required by most lenders when a borrower puts less than 20% down on a purchase loan. Paid for by the borrower, PMI not only protects the lender from foreclosure, it also enables many buyers to qualify for loans and purchase real estate when they couldn’t have otherwise. On January 1st, 2007, legislation went into effect making Read the rest of this entry »
