FHA reverse mortgage interest rates

If you haven’t heard, FHA announced on February 14th that it is raising the annual mortgage insurance premiums, also known as the FHA monthly mortgage insurance. These changes are mentioned in Mortgagee Letter 11-10 and become effective on or after . The new change is 25 bps more.

I have already heard that some of you think this will hurt the housing market and our economic recovery. Why the changes? HUD wants to strengthen the FHA’s Mutual Mortgage Insurance Fund, known as the MMIF. Think about it this way. If FHA doesn’t become pro-active now and FHA disappears in the future, then where do you think we would be regarding financing options.

Keep in mind that Fannie Mae has a pricing change that goes into effect on April 1st, 2011. That many lenders and investors have already made this change to their pricing. Also, there is no change to the Upfront Mortgage Insurance Premium of 1 percent for FHA loans, just the monthly premiums have been changed.

Old verse New Monthly Mortgage Insurance Changes

As you can see by the red arrow, indicating that this goes into effect on April 18th, not April 4th. So what does this all mean to those refinancing or buying new homes with a FHA mortgage?

This is based on a 0, 000 sales price and the end result is that it would cost the buyer .26 more in their total monthly mortgage payment. You can also look at it from the flip side when qualifying buyers. This could lower the new buyers purchasing power by about $9, 000. Meaning, instead of the $250, 000 purchase price in the example, they can now afford a $241, 000 home.

This new change is for your primary 1 to 4 unit properties. This change does not affect Title 1 loans, the HECM loan (reverse mortgages – which I am writing about tomorrow), the HOPE loan, and a few other types of FHA loans. This can also be found in the new FHA mortgagee letter 11-10.

There are also new changes to how one would have to request a FHA case number, cancellations of FHA case numbers, and a few other issues. These changes can also be found in the new FHA mortgagee letter 11-10.


Whose allegedly behind the mortgage crash

2010-10-26 22:02:47 by 2bbcats

Hey folks things are crazy. There's an article from Life Magazine 1967 the Brazen empire outlining who'd be setting decent folks up in Preditory loans. This thing was launched and many agencies & officials nationwide played along. Youtube has a story entitled "DECEPTION" Whose allegedly behind the mortgage crash. I know this is going to make a great movie. Martin Scorcesse could play the guy who set this up. It appears folks have been lied to about what really happened and why folks are angry about the economy, businesses and foreclosures. The authorities who run financial institutions and agencies had to know

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  • Avatar bag-ten In 2003 what did FHA Reverse Mortgages pay in interest on unused available cash?
    Jul 31, 2006 by bag-ten | Posted in Personal Finance

    In 03 the economy came back like gangbusters. Did money that seniors had in reverse mortgage equity reserves also benefit from rapidly rising rates? Did those rates go up and by how much? Or did they even go down?

    • Bag-Ten, The reverse mortgage equity reserves or lines of credits grow at the same rate as the interest being charged against the borrower including the FHA mortgage insurance payment of .5% a year. So to figure out what someones line of credit growth rate was at any time you have to know what the current interest rate is being charged. FHA reverse mortgage interest rates are tied to the 1 year Treasury Bill plus 1.5%. In 03 the average T-Bill was around 1.25%. So to figure out what the return was in 03 for a reverse mortgage line of credit you would figure 1.25%(T-Bill) + 1.5%(Interest rate) …