The Federal Housing Administration is increasing its annual mortgage insurance premium one quarter of one point on all 15-year and 30-year mortgages backed by the agency.
The increase is in response to a congressional mandate that gave the FHA permission to increase premiums and keep its insurance fund liquid. The higher premiums also were outlined in President Obama’s 2012 fiscal budget, which estimates the FHA will insure $218 billion in loans during the 2012 fiscal year. The changes will effect loans issued on or after April 18.
Once the change takes place, the monthly insurance premium paid on a 30-year, fixed-rate FHA-insured loan will increase by $33.
On loans with amortization terms greater than 15 years, the FHA’s annual mortgage insurance premium will increase to between 110 and 115 basis points. For loans with amortization terms of 15 years or less, the annual premium is set to rise between 25 and 50 basis points.
After the transition, a borrower holding a 30-year, fixed FHA-insured loan valued at $163,000 will be paying $151 per month in premiums, compared to $118 under the current rates.
“After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market, said FHA Commissioner David Stevens in a statement. “This quarter point increase in the annual MIP is a responsible step toward meeting the congressionally mandated 2% reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.”
VA LOANS
You can apply for a Certificate of Eligibility by filling out a governmental form called the VA Form 26-1880, Request For a Certificate of Eligibility For Home Loan Benefits. You should present this form, along with your military service documents, to a VA Eligibility Center. This document is available for download and print online at the VA home loans government website. If you don’t have proof of military service, it may be possible for the VA to establish this for you. However, it’s best to have all documentation ready for quicker processing time.
Many lenders also have access to the Certificate of Eligibility, and through an internet system called ACE, they can quickly process your request and find out if you are eligible for a VA mortgage. If you choose to find out through your lender whether or not you can obtain a Certificate of Eligibility, it is necessary to have all proof of service records. Depending on circumstances, the VA may not be able to process your request through this method. The best way to find out is to ask your lender for more advice.
Qualifications for Eligibility
Veterans who served active duty in the Armed Forces after World War II and were discharged under terms other than dishonorable are eligible for VA home mortgage benefits. During war time periods, and active duty service, the veteran must have, at the minimum, 90 days of service on their records. If a veteran has served only during peacetime periods, the active service requirement is 180 days. This is true for active duty military personnel, as well. Enlisted service veterans who served after 1980 and officers who served after 1981 must have completed 2 years of service to be eligible. Selected Reserve and National Guard members are also eligible if they have served 6 years of service and were honorably discharged.
Second VA Mortgages
You may still be eligible for more entitlement even if you’ve taken out a VA mortgage in the past. Because the entitlement amounts have increased over time, there may be a difference between the amount you were initially entitled to when you first took out your mortgage and the amount the government allows now. Currently, the entitlement amount for houses under $144,000 is $36,000, and over $144,000 is $60,000. So, for example, if you took out a VA mortgage in 1975 and used $12,500 of your entitlement amount, you may still be eligible for an additional $23,500 (or more).
However, to be eligible for this second entitlement, you must have either sold your house and paid the original loan amount in full, if you still own the home but have paid the full amount of the mortgage, or if another veteran-transferee agrees to assume your mortgage and transfer his or entitlement to you.
VA Mortgage Approval Requirements
There are several requirements that must be met before your VA mortgage is approved. First of all, you must hold a valid Certificate of Eligibility, proving you are qualified to receive the VA mortgage. You must take the loan for a valid purpose – a house, townhouse, condominium or other governmentally approved reasons. You must intend to occupy the house within a reasonable time period after closing. Your credit must be satisfactory, and the income you and your spouse receive must be established and adequate to pay the monthly mortgage.
