As you are learning, the mortgage industry likes to change the rules – usually in the middle of the game. In fact, just this week the Federal Housing Administration released their risk-based mortgage pricing.
While the new pricing does not affect the rate you are receiving on your loan, it does determine the upfront and monthly mortgage insurance you pay for the FHA to insure your loan.
Previously, the fee schedule was simple. Your upfront fee for mortgage insurance was 1.5% of your loan amount and could be paid at closing or included in your loan amount. There was also an ongoing annual mortgage insurance premium of 0.5% of your original loan amount paid monthly.
The new fee schedule isn’t so cut and dry and includes adjustments for your upfront mortgage insurance and your ongoing monthly premium. The risk based pricing for calculating your premiums are based on – you guessed it – risk! The FHA insures your loan, so to help them offset their risk, they factor in your FICO score and your loan to value ratio (loan amount to purchase price) to determine your premiums. Here is a nifty table that demonstrates the breakdown.
So although the rules will continue to change, FHA is still a viable option for the right San Mateo County borrower. This action, as does others like it, just goes to show why you need a Mortgage Advisor that is dedicated to your transaction, stays current on market updates and knows what options are viable for you.
Chris Williamson is a Mortgage Advisor – Broker Associate with Guarantee Mortgage in San Mateo, California and author of San Mateo Mortgage Blog.
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Tags: fha, first time home buyer, Mortgage, san mateo county real estate
Raymond Stoklosa, Broker/Co-Owner
Chela Stoklosa, Realtor/Co-Owner
