From HUD: Upcoming Increases to Mortgage Insurance Premiums

Today the HUD announced changes to the premium structure for FHA-insured single family residential mortgages.  According to the press release, “FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount.  Upfront premiums (UFMIP) will also increase by 0.75 percent.”

The premium increases will be rolled out in the next few months.  Starting April 1st 9th, 2012, all FHA-insured loans will see the 0.10% increase in MIP.  Loans over $625,000 will be assessed an extra 0.25% increase in MIP starting June 1st 11th, 2012, to reach the total 0.35% increase.

The increase in UFMIP will bring this charge from 1% of the base loan amount to 1.75% starting April 1st 9th, 2012.  This change will amount to approximately $5 a month increase to borrowers, on average. The FHA will still allow borrowers to roll this charge in with their mortgages.

The HUD press release about these upcoming premium increases can be read here. What are your thoughts about these increases? Do you think the increases will achieve the goal the FHA has set out for these monies– to contribute to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund?

EDIT: On March 6th HUD released Mortgagee Letter 12-4 which contains the exact roll out dates of the MIP and UFMIP for new FHA borrowers. The press release sited in this blog post used the language “on or after …” when indicating the projected roll out dates. I’ve updated the text above to reflect the actual roll out dates contained within Mortagee Letter 12-4.