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Act Now to Avoid Paying Longer Terms on FHA MIP

Act Now to Avoid Paying Longer Terms on FHA MIP

In our last post, FHA MIP Changes, we talked about how FHA mortgage insurance premium amounts increased April 1, 2013. Effective June 3, the amount of time borrowers must carry MIP increases to either 11 years, or for the life of the loan, depending on LTV (loan to value) at the time of origination.

  • LTV under 90% — MIP will last 11 years (no 78% criteria anymore)
  • LTV over 90% — MIP will last the entire term of the loan (no 78% criteria anymore)

Begin processing loan paperwork now

To avoid having to pay MIP for these longer term periods, you must begin processing your paperwork now – as the MIP term is based on when your Case Number is assigned. All Case Numbers assigned before June 3, 2013 will fall under the old MIP timetable (you can drop MIP after five years if you’ve reached < 78% LTV).

All fifteen-year loans under 78% LTV will also be subject to the new MIP terms. Formerly, these loans weren’t subject to MIP.

Factor in time for unforeseeable delays

The first step we at Meridian take to obtain your FHA case number is to establish a new FHA case with HUD by providing the required information (e.g. validating borrower information, credit history, etc.).

This process is comprehensive and complex – and can take up to a week or more. In addition, if you’re borrowing money to fund new construction, your address may not be listed in the FHA database – delaying case number assignment. Other factors that can cause a delay include: any issues with credit history, missing or incorrect borrower information and not having an active loan application in progress.

Starting your application now – before the new MIP terms go into effect – can save you literally thousands of dollars over the life of your loan. To begin your loan application process, contact Meridian Home Mortgage today.

FHA MIP Changes

FHA MIP Changes

The following two changes are effective for all case numbers assigned on or after April 1st:

1. FHA will be increasing their MIP fees (up to 10 bps).

Your FHA case number cannot be assigned until we get your signed loan disclosure package back. So, Meridian began structuring loans with the new MIP fees as of Monday, March 18th 2013.

If we receive your package back before April 1st, we will attempt to reduce your MIP amount. But Meridian cannot promise that your FHA number will be assigned in time. Please discuss this with your Personal Adviser if you have any questions or concerns.

2. MIP will no longer be cancelled after 5 years and 78% LTV. Instead:

  • LTV under 90% – MIP will last 11 years (no 78% criteria anymore)
  • LTV over 90% – MIP will last the entire term of the loan (no 78% criteria anymore)

The following change is effective for case numbers assigned on or after June 3rd:

15 year loans under 78% LTV will no longer be exempt from MIP. They will have the same MIP as other 15 year FHA loans < 90% LTV.