FHA Announces Changes In Mortgage Insurance Rates For Chicago Home Buyers

Congress has authorized FHA to change the amount charged to borrowers for both the Up Front and the Annual Mortgage Insurance (MI) premiums. These changes as outlined in Mortgagee Letter 2010-28, are effective for all FHA case numbers assigned on or after October 4th, 2010.

Here are the six things you need to know about these changes if you are buying a Chicago home:

1. The MI premium changes apply to purchases, regular refinances and streamline refinances only (reverse mortgages have different MI premium changes).
2. The current Up Front MI premium is 2.25% of the loan amount and the new Up Front MI premium will be 1.0% of the loan amount for all standard FHA programs.
3. The current monthly MI premium is .55% and the new monthly MI premium will be .90% if the Loan-to-Value is GREATER than 95% on 30 year loans. Since most buyers put only the minimum 3.5% down this applies to most loans.
4. The current monthly MI premium is now .50% for Loan-to-Values EQUAL to or LESS than 95% on 30 year loans and the new monthly MI premium will be .85%.