Posted on in Mortgage Regulation
A new risk-based premium program for FHA loans went into effect July 14, 2008. Until two days ago, FHA loans, which are government backed programs, charged all borrowers the same regardless of credit score or loan to value. The one size fits all plan is gone. Here are the changes that consumers need to know. These apply to both purchase and refinance loans. They do not apply to the FHA’s Reverse Mortgage program (HECM) or Title 1 loans. If the Loan to Value is 95% or less, the annual premium is 50bps or .5% x the loan amount. If the LTV is higher than 95%, the annual premium is 55bps. The upfront premium, a financeable non-refundable fee, is now determined by a combination of the credit score and the loan to value. Since consumers with less money to put down and/or with less than perfect credit are bigger risks to default, they will be required to finance additional fees into […]
by jberman