FHA PMI Rates have gone up so many times since 2009 to cover losses – that we’ve lost count. The FHA PMI Rates are currently so high that it’s cheaper (assuming you have good credit scores) to use a Conventional Loan to finance your Mortgage! Why? Because for the most part of the past 2 years the FHA PMI Fund has been “underwater,” due to the number of foreclosures, that they had to pay claims for.
But new “more difficult” Mortgage Underwriting Standards that went into place Nationwide a few years ago, along with a Real Estate Market that is getting stronger, has created a new dynamic. For the first time in over two years, the FHA PMI Rates Program will not have to ask Congress for more money – and is actually in the “black.” This is according to a report released from an audit in November to Congress.
Because the FHA PMI Rates Audit /Actuarial Review of FHA shows that the FHA Mortgage Program is back on more solid financial footing, we could see LOWER FHA PMI Rates!
FHA PMI Rates Lower in 2015?
There are those in Congress who do not think that the Government should be in the “Mortgage Business,” because recent downturns in Real Estate have shown that this is a “risky” business. Those members believe that the FHA PMI Rates Program has recovered at a slower than expected pace, and the program needs to build up a substantial “war chest” – meaning that there would not be a large reduction in FHA PMI Rates in 2015. Those guys were WRONG! FHA PMI Rates are going LOWER!
Keeping FHA PMI Rates exactly where they are in 2015 would have been great news for Conventional PMI Companies – who are benefiting from the unique position they currently find themselves in (being lower than FHA PMI Rates).
The general thinking, now that the Republicans have control of Congress, was that unless building and real estate lending really start to falter in 2015, there’s was little chance that HUD would call for a change to the FHA PMI Rates program in 2015. If that was to play out (e.g., no change in FHA premiums in the near future) it was a positive for private mortgage insurers and a small negative for mortgage originators and builders that cater to FHA borrowers.
BUT REMEMBER – the FHA PMI Rate Audit showed that FHA was solvent – so it wasn’t up to Congress to figure out what had to happen to the FHA PMI Rates!
FHA PMI Rates 2015 Due to Change!
According to news released this afternoon – the National Association of Realtors (NAR) and the Mortgage Bankers Association were heard. FHA is currently scheduled to LOWER the FHA PMI Rates by .5% on or around January 26, 2015!
“NAR is pleased that the 2014 Actuarial Review of the Federal Housing Administration confirms that the Mutual Mortgage Insurance Fund (FHA PMI) is healthy and continues its positive trajectory. The ongoing decline in delinquencies and stabilizing home values indicate that FHA will stay on track to rebuild its capital reserve fund and ultimately meet the 2 percent excess reserve amount required by Congress. Now that the MMI (FHA PMI) Fund is on a path to recovery, NAR urges FHA to lower its annual mortgage insurance premiums (FHA PMI RATES) and eliminate the requirement that mortgage insurance be held for the life of the loan.
Achieving home-ownership has become more difficult with current FHA mortgage insurance premiums. NAR estimates that in 2013, nearly 400,000 creditworthy borrowers were priced out of the housing market because of high FHA insurance premiums. By lowering its fees, FHA could provide greater access to home-ownership for historically under-served groups. To put it in perspective, over the past four years, the percent share of first-time buyers using FHA-backed loans shrank from 56 percent to 39 percent…NAR is a strong supporter of the FHA and its vital role in the mortgage marketplace.
In light of this report, NAR believes that Congress should not dramatically change the FHA or redefine its purpose. We will continue our work with FHA to help make the dream of home-ownership a reality for millions more Americans.”
Delinquency Rates for all mortgage loans have declined in the past year – and more banks are reporting fewer foreclosure proceedings. All of this is great news for the mortgage business, except that we are a sadistic business… GOOD NEWS is generally seen as bad news for us. So in this case, lower delinquencies, could signal to Congress that the housing market is doing well – so the housing market can handle the current “higher than normal” FHA PMI Rates.
FHA Loans and FHA PMI Rates
The FHA Mortgage down payment is only 3.5%, and that money can come from a gift, or the NCHFA 3% Grant program. If you have student loans that are in deferment, it’s MUCH easier to qualify with the FHA Home Loan program – because unlike USDA Home Loans, those deferred loans will not count in your debt to income qualifying ratios.
Additionally, FHA Loans only make you wait 2 years after most serious credit catastrophes – and they will allow us to qualify borrowers with minimum credit scores that are much lower than a Conventional or USDA Home Loan. In general, to obtain aFHA Home Loan in North Carolina you need to be sure you have 2 or 3 open lines of Credit ( a credit card, a car payment) and you need at least 12 months where you didn’t miss a payment, and you had no new “negative” stuff report on your credit report.
FHA Loans are for non-occupying co-borrowers. This is a great program for folks who in college, or recent graduates. Both parties have to have pretty good credit, meaning you can’t just add a parent or a sister to a loan because you have awful credit – but their income CAN help in a situation where we can’t count all of your income right now.
A great example of this working, is a student working off of a grant. The FHA Loan non-occupying co-borrower doesn’t have to be just for a student either. This is the kind of program we are seeing many families use to put a parent who doesn’t have sufficient retirement income become eligible to live independently. Single parents benefit from the FHA Loan Program too! FHA Loans, and the Down Payment Assistance Grants available, are great when it comes to figuring out how families can help each other buy a house.
FHA PMI Rates are charged in two separate premiums, similar to the USDA PMI Rate structure. There’s an upfront FHA PMI premium collected at closing. Generally the Up Front FHA PMI premium is financed into the loan. For a Borrower who is getting a 30 year mortgage, that is under the high cost limits (so anywhere in NC) and putting the minimum of 3.5% down – the rate for this initial FHA PMI Premium is 1.75%. THIS rate is NOT scheduled to change later this month, however it makes LITTLE difference to the overall mortgage payments.
There’s also a monthly charge, which is called an “Annual” FHA PMI Rate. The annual FHA PMI Premium charges are broken into 12 monthly payments. The FHA PMI Rate for the Annual premium is currently 1.35%. To calculate that – you would take your TOTAL Loan Amount (including your Upfront PMI) and multiply that by the Annual FHA PMI Rate of 1.35% (assuming again that you are the typical FHA Home Buyer getting a 30 year mortgage with the minimum down payment). Divide that Annual FHA PMI Premium amount by 12. You will have THAT amount added to your Principal and Interest Payment each month.
On or around January 26, 2015 that rate is scheduled to be lowered to .85% – which is what it was a couple of years ago! This is huge news, because it’s happening while mortgage interest rates are FALLING. It is truly a windfall for homeowners looking to refinance to lower their overall mortgage payments!
We can also do a FHA Streamline refinance for folks who have an Investment Property with a FHA Mortgage on it! We know MANY people in the past few years “combined” households, and decided it was not time to sell – so they’ve been renting out one of their homes. We can reduce your overall mortgage payment by A LOT between lower monthly FHA PMI rates and LOW Mortgage rates!
For more information about Qualifying for a mortgage in NC, or for more information on FHA PMI Rates in NC, Call Steve and Eleanor Thorne, 919 649 5058 – we have the best mortgage rates, and we want to take the time to help you buy AND AFFORD your next home!