Thursday, May 30, 2013

Louisville Kentucky FHA Mortgage Insurance Changes June 2013


Kentucky FHA Mortgage Insurance Premium (MIP) Changes

FHA Kentucky Mortgage Insurance Premium Changes

As announced in Mortgagee Letter 2013‐04, HUD will be removing the annual monthly Mortgage Insurance Premium (MIP) exemption for loans with terms of 15 years or less and loan‐to‐value (LTV) ratios less than or equal to 78% at origination. The period for assessing the annual monthly MIP has also been revised. These changes are effective for case numbers assigned on or after June 3, 2013 and are detailed below.
Increase to Annual MIP FHA loans with terms of 15 years or less and LTV ratios less than or equal to 78% at origination will now require annual monthly MIP. Streamline refinance transactions endorsed on or before May 31, 2009 are not affected by this change.

In the past, borrowers with  a Kentucky  FHA 30 year loans paid MIP as long as the LTV was greater than 78%. There was also a minimum payment period of 5 years (60 months). For 15 year loans, FHA required that the MIP be paid until the loan reaches 78% LTV, but there was no minimum 5 year requirement.
Effective June 3, 2013, the annual mortgage insurance premium for Kentucky FHA mortgages will no longer be based on a loan to value criteria of 78%. Cancellation of FHA MIP will be eliminated for loans that have a beginning LTV of 90% or more. For these loans, MIP must be paid for the entire term of the loan, in other words, forever. For loans that have a beginning LTV of 90% or less, the annual mortgage insurance premium will be required for 11 years.
This means that homeowners using an FHA mortgage for financing beginning June 3 will need a 10% or more down payment in order to cancel FHA MIP. Otherwise, MIP will no longer allowed to be canceled on a Kentucky FHA Mortgage loan. . 

The only way to cancel the mortgage insurance premium will be through a refinance to a conventional mortgage when the loan to value reaches 78%.


Note: HUD Form 92900‐B (Important Notice to Homebuyers) will be updated to include the revised MIP maximum duration on June 3, 2013.
FHA Case Number Assignments The last day the existing MIP is available is this Friday, May 31, 2013. In order to meet FHA’s deadline,




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