Most people, when told that both good and bad news awaits them, will opt to hear the bad tidings first.  Although they dread receiving unpleasant news, their hope is that the ensuing good news will erase, or at least soften, what they heard earlier.  In the assumption that owners of Chester County PA real estate share this approach, the FHA has recently announced bad news/good news regarding their mortgage interest premiums (MIP) and fees.

The Bad News:  As part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund, a new premium structure for FHA-insured single family mortgage loans on Chester County PA real estate was announced. 

  • 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. This change is effective for case numbers assigned on or after April 1, 2012.  
  • FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500.  This change is effective for case numbers assigned on or after June 1, 2012.

FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.  These marginal increases are affordable for nearly all homebuyers who would qualify for a new mortgage loan.  Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the new pricing changes.

So, if you are FHA qualified and have been sitting on the fence, NOW is the time to become a Chester County PA real estate owner while you can save money!

The Good News:  In a bid to make its Streamline Refinance Program more affordable to U.S. homeowners the FHA has introduced a new concept in mortgage insurance premiums. Going forward, the amounts the owner of Chester County PA real estate will pay for FHA mortgage insurance will depend on the age of existing FHA mortgage.  The longer you've had your mortgage, the less you're going to pay for MIP.  Certainly a reason to smile for many people!