FHA Mortgage insurance premiums on loans higher than $625,500 have recently seen another increase, as there was an FHA increase across the board for all loan amounts on April 9th 2012. In early June, there was another monthly premium increase of 25 basis points to 1.50% if one was putting down between 3.5% and 5%. Borrowers with over 5% equity or with more than a 5% down payment will see and increase of between .2% and 1.4%.
This increase means that monthly mortgage insurance costs have jumped a staggering .3% for these higher loan amounts. The announcement of an increase in fees is never good news, but at loan amounts this high it makes a very noticeable difference.
Before April 9th, 2012, your mortgage insurance payment on a $625,500 loan amount would be $599.44. Now, after the June 11th 2012 increase, MIP on this same loan amount is $781.86. Over a span of 62 days, the payment has increased $182.45.
Because conventional loan limits were reduced from $729,750 to $625,500 in late 2011, FHA is definitely the most forgiving and cost effective alternative to Jumbo financing available on the market. Risk based pricing is an increase to fees – not interest rates – related to your interest rate. For example; a credit score of 640-659 previously had a rate of .375 and now has a rate of .5. An increase in fee won’t always have direct results in an increase of your interest rate, depending on how the rates are priced on a particular day.
The new increase in fee is applicable to FHA and VA and will apply to borrowers with credit scores of less than 680. There is good news however. FHA borrowers with a credit score of over 720 will get a credit of .25% that can be used to reduce your interest rate.