Today the FHA announced planned changes that will increase the costs of FHA loans going forward. First, the monthly mortgage insurance premium on new FHA loans will increase once again. The plan is to raise the annual MIP by 0.10%. Second, as we previously reported, the FHA will begin requiring their monthly mortgage insurance premium to continue for the life of the loan. Currently FHA monthly MIP payments can be dropped after five years when more than 22% equity is reached in the home. When these changes are implemented that will no longer be the case for all new FHA loans.
The FHA will give official guidance on the timing of these changes in the next few days. But we know already that anyone with an FHA loan should contact us immediately to look into an FHA streamline to a lower interest rate while rates are still near all time lows and before these new costs are implemented.