I received some great information from one of my Preferred Lenders and wanted to pass it along.  Currently FHAs Mortgage Insurance Premium will cancel after the loan reaches a 78% LTV but starting in June,  2013 this will all change to the following:

·       With an initial down payment of equal to or less than 9.99%, the MIP will be effective for the entire life of the loan! This will be on 15, 20, 25 and 30 year FHA loans.  (currently this cancels after 5 years and the loan reaches a 78% LTV)
·       With a down payment between 10% - 22%, the MIP be effective for 11 years, regardless of the term of the loan.

(currently an FHA loan on a 15 year term, with a down payment of at least 22.1% would not include ANY MIP)

Effective April 1, 2013

·       Upfront MIP Premium for all FHA loans with a 78% or higher LTV (22% or less down payment) will be 1.75%. 
·       For terms greater than 15 years, the monthly MIP will be based on 1.30% if the down payment is greater than 5%; and based on 1.35% if the down payment is less than 5%. (this is a .10% increase from current requirements)

Another bit of interesting information is the reason why these changes are being made:

“FHA remains responsible for insuring 10 percent of the outstanding loan balance throughout the entire life of the loan, a term which often extends far beyond the cessation of the current MIP monthly Payments.”

I believe now is a great time to buy Real Estate – even after these changes take effect, but of course it is better if you can act sooner rather than later once these changes are implemented. 

In my opinion, these changes are welcomed and should strengthen our economy and incentivize home-owners to be responsible for their properties because they will have money in the property as well and it won’t be as easy to walk-away/foreclose as the current environment invites people to do.

What is your opinion?  I would love to hear from you!