For many home buyers, mortgage insurance is about to get more expensive. FHA has announced changes to both the upfront and annual premiums that will be applied to FHA loans assigned on or after Oct. 4.
As a result of HR 5981, the FHA upfront mortgage insurance premium (which is typically collected at closing and financed into the loan) will be reduced from 2.25 percent to 1 percent. However, the new annual mortgage insurance premiums (which is collected as part of your monthly mortgage payment) will cost almost double (the exact amount depends on the loan-to-value ratio).
The upcoming rate changes were announced in August and were supposed to take effect on Sept. 7, but after many in the industry expressed fears that the system wouldn’t be able to handle the changes in time, the date was pushed back to Oct. 4.
For an example of how the rates may affect you, here’s a good example in an article by RisMedia.
You can also see details about the update at the official Mortgagee Letter-2010-28 on HUD’s website.