For anyone who is considering a new FHA loan, which includes taking advantage of the historically low rates through an FHA Streamline refinance (see past posts on this subject), you would be wise to get started now.
Congress just passed H.B. 5981 and it's expected to be signed by the President shortly. This bill gives the FHA the power to hike monthly premiums (mortgage insurance premiums) it charges to consumers. Currently the monthly premium is .55%/year, which translates to about $46 for every $100,000 financed. It is expected that HUD will raise the premiums initially to .9%, which will add about $30/month for the same $100,000 financed. The bill also give HUD the authority to raise the monthly premium to a factor of 1.55%. Given the authority, you can be sure it's coming.
There is a positive element to the bill. Presently, in addition to the monthly premiums, HUD charges the borrower 2.25% of the loan amount as an Up Front Mortgage Insurance Premium charge on every FHA loan - this Up Front premium will most likely be reduced to 1%.
The net effect of these changes will be an increase in the cost of an FHA loan. The planned effective date of these changes is September 7th, so again, if you're someone who's been considering refinancing and FHA loan, do it NOW. As always, we'd be happy to answer any questions you have.
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