The FHA loan continues to be one of the strongest mortgage loan programs on the market but there are some big changes coming as of April 1st, 2013. The monthly mortgage insurance premium, also known as MIP, has been at 1.25% but after April 1 that will increase to 1.35%.
But the biggest change coming for FHA will be that the monthly mortgage insurance premium can never be taken away; it will exist over the life of the loan.
Currently, borrowers with an FHA loan can request the MIP be canceled when their loan-to-value goes down to 78%. After April 1st this MIP will be permanent for the life of the loan.
The FHA loan still offers many first-time home buyers or those with less-than-perfect credit a great way to purchase a home since it only requires 3.5% down. FHA loan is also not as restrictive as a conventional loan with mortgage insurance. It also allows up to 85% on cash-out transactions and if a borrower is trying to pay off a first and second mortgage, the FHA loan will allow an loan-to-value ratio of 97.5%.
It’s good news that the new FHA streamline loans will not be affected. If a borrower currently has an FHA loan that was secured before June 1st 2009, then they can streamline into a new FHA loan and the Mortgage Insurance is actually cut in half and the up-front mortgage insurance all but goes away. The new FHA streamline can save borrowers a lot of money if their loan qualifies. Again the FHA streamline on loans taken out prior to June 1st of 2009 will not be affected by the changes coming on April 1st.
If you’re a first-time homebuyer and have questions on FHA loans, or for any other mortgage or refinance information, contact Indigo Mortgage at 505-836-5700. Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. The company has five mortgage divisions for Residential, VA Loans, Reverse Mortgages, Construction and Commercial loans. Our mortgage broker and underwriters are certified by the National Mortgage Licensing System, NMLS # 239924.
INDIGO Mortgage (505) 836-5700 Albuquerque's Premier Mortgage Loan Provider! We have five loan divisions to serve you. Select from Residential Loans, Commercial Loans, VA loans, Reverse Mortgage Loans or Construction Loans.
