Inside Houston Real Estate

HR 5981 has passed the house and senate and it is on its way to the presidents desk to be signed into law. What this does is allow FHA to increase its annual premiums, raising the statutory cap from 0.55 percent to 1.55 percent.  It is FHA's intention that effective on September 7, 2010, FHA’s upfront mortgage insurance premium will be adjusted down to 100 basis points on all amortization terms and the annual mortgage insurance premium will increase to 85-90 basis points on amortization terms greater than 15 years and possibly goes as high as 1.55 basis points. So what does all this mean; lets break it down in easy numbers

$200,000 Loan @ 5.000% - 30 year fixed

If we look at the first coloumn with todays upfront MI and the monthly MI that the consumer has to pay and compare it to what is going to happen when this bill goes into effect on September 7,2010 you can see an increase of $43 to the monthly principle and interest payment. But! it does not stop there congress has given FHA the room to push the monthly MI up as high as 1.55% as you can see in coloumn 3. So what this means is if your loan officer does not get the FHA case number before September 7,2010 your customer will be paying the new MI cost. So, those customers that you have setting on the fence you may want to let them know in less than a month there payment will increase $50 a month and could go up to $150 extra a month because of this bill.