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FHA Changes Mortgage Insurance Rates-less up front cost but higher payments; St Louis Mortgage Watch

Paramount Mortgage Company - St Louis New regulations signed into law by the President allow HUD to increase the amount of premiums charged for FHA single family housing mortgage insurance programs, however lower that actual up-front cost paid by borrowers.

Annual Premiums Increase:

The annual premiums for FHA mortgage insurance that are added in with the mortgage payment will increase however.  Beginning October 4, 2010, all FHA loans with terms greater than 15 years will be charged a higher rate for FHA mortgage insurance as shown below:

  • For loans that are 95 percent of value or higher, the fee will increase from .55 percent to .90 percent
  • For loans that are less than 95 percent of value the fee will increase from .50 percent to .85 percent.

Upfront Premiums Decrease:

On October 4, 2010 the amount of upfront mortgage insurance premiums that FHA charges a borrower will decrease from 2.25 percent of the loan amount to 1 percent of the loan amount.

Overall Effect of FHA Mortgage Insurance Premium Changes is less up front expense but higher payments:

  • Example: – Before October 4th
    • Base Loan: $144,750
    • Upfront Mortgage Insurance Premium:  $ 3,256
    • Total Loan Amount:  $148,006
    • Base payment@ 4.25% (P+I)  $728.10
    • Mortgage insurance added to payment: $66.34
    • Total mortgage payment:  $794.44
  • Example: – After October 4th
    • Base Loan: $144,750
    • Upfront Mortgage Insurance Premium: $ 1,447
    • Total Loan Amount: $146,197
    • Base payment@ 4.25% (P+I)  $719.20
    • Mortgage insurance added to payment: $108.56
    • Total mortgage payment:  $827.76 –

In the example above you can see the approximate increased cost from the FHA change would be about $33.32 a month which, in the case of the $144,750 loan amount used in the example, is the equivalent of paying an additional $6,750 for the house.

St. Louis Mortgage Interest Rates – September 15, 2010

  • 30-year fixed-rate  4.250% no points
  • 15-year fixed-rate  3.750% no points
  • 5/1 adjustable rate 3.25% no points
  • FHA/VA 30-year fixed rate  4.375% no points
  • Jumbo 5/1 ARM 4.000% no points
  • Jumbo 15 year fixed-rate  4.500%

For more information or if you have questions on mortgage rates in St. Louis you may contact me by phone at my direct line, (314) 372-4319, email at rfishel@paramountmortgage.com or you can visit our company website at http://www.paramountmortgage.com.

 

 


*Note- The above rates are based upon a typical sale price of $187,500 with a 20% percent down payment leaving a loan amount of $150,000 to a borrower with a 720 credit score for a loan with no discount points charged. Rates and terms will vary depending upon loan amount, home value, credit and income of borrower.

This information is provided by this author and this site for informative purposes only and is not warranted or guarteed in any way.

 

 

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