Minnesota Mortgage Blog - MN Mortgage and Real Estate News

FHA changing MIP / PMI requirements effective July 14, 2008

FHA now cheaper, or more expensive to borrowers depending on credit!

FHA, as with many other lending options is switching to new RISK BASED PRICING. Risk-based premiums enable FHA to respond to changes in the market, like the recent implosion of subprime lending, by reaching out to higher-risk borrowers without having to raise premiums for all borrowers. Borrowers are better off, even with higher mortgage insurance premiums, because FHA insurance gives borrowers access to substantially lower interest rates than are charged for subprime loans, thereby lowering borrowers' overall borrowing costs.

Many of FHA's lower-income borrowers have FICO scores above 680 and would qualify for premium reductions relative to today's premium levels. In fact, as a result of the predominantly low- and moderate-income character of FHA borrowers, a larger number of low-income borrowers would benefit from premium reductions than would moderate-, middle-, and upper-income borrowers combined.  

The first number is the UP-FRONT MIP. The second number is the monthly PMI 

 Call Joe Metzler for all your MINNESOTA FHA deals at  (651) 552-3681

 Need all the details?

For easy reading, start at page 26....     http://portal.hud.gov/pls/portal/docs/PAGE/FHA/IMAGE_LIBRARY/5171-N-02%20RBP%20FINNTC%20TO%20PUBLISH%20%205-13-08%20.PDF