For those of you who bought the advance tickets to the midnight show of “The Mortgage Shopaholic’s Guide to Recovery,” we appreciate your eagerness, but before the lights dim to watch the feature, you must suffer through the never ending movie previews. We at San Mateo Mortgage Blog must stick with tradition, so before you get comfy with your 64oz soda and industrial size bag of popcorn, soak up anticipation of the blog posts to come…………….
This week the Federal Housing Administration released their risk based mortgage pricing. This risk based pricing has nothing to do with the interest rate of your loan. Instead, it determines the upfront and monthly mortgage insurance you pay the FHA to insure your loan.
Previously, the fee schedule was simple. Your upfront fee was 1.5% of your loan amount and could be paid at closing or included in your loan amount. You also had an ongoing annual mortgage insurance premium of 0.5% of the original loan amount paid monthly.
The new fee schedule isn’t so cut and dry. The schedule now has adjustments for your upfront mortgage insurance and ongoing monthly premium. The risk based pricing 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 (loan amount to purchase price) ratio to determine your upfront fee and monthly mortgage insurance premium. Here is a nifty table that helps you determine if you will be penalized because of your risk or, in a not so obvious way, be rewarded with lower premiums.
As the year rolls on, the constant flux of the mortgage industry will continue. If you enjoy our take at San Mateo Mortgage Blog – Bay Area Mortgage Broker, please subscribe to our RSS feed to experience the coming attractions before they come to theatre near you.
Related posts:
- 2009 FHA Loan Limits in San Mateo County
- Consider this Before Determining Whether an FHA Loan is Right for the Bay Area Borrower
- To the Point: Paying Points for Your San Mateo County Mortgage
- FHA Announces Increased Upfront Mortgage Insurance for April 2010
- Real Estate Closing Costs and Dating Etiquette: Can You Go Dutch in San Mateo County?
