The Federal Housing Administration (FHA) implemented a 25 bps increase to its annual premium rates on April 18, resulting in a payment increase for FHA borrowers. With this change, RMIC (an iLoan preferred mortgage insurer) offers equal or lower monthly premium rates on all LTVs with no upfront premium.
| RMIC Monthy PMI vs. FHA MIP · Lower Total MI Premiums | ||||
| 30-Year Fixed · Purchase1 Unit Primary Residence Loan Amount £ $417,000 |
> 95% LTV · 35% Coverage | 95% LTV · 30% Coverage | ||
| FICO 720+ | FICO 700+ | |||
| RMIC | FHA | RMIC | FHA | |
| Upfront | — | 1.00% | — | 1.00% |
| Year 1 | 1.15% | 1.15% | 0.94% | 1.10% |
| Year 2 | 1.15% | 1.15% | 0.94% | 1.10% |
| Year 3 | 1.15% | 1.15% | 0.94% | 1.10% |
| Year 4 | 1.15% | 1.15% | 0.94% | 1.10% |
| Year 5 | 1.15% | 1.15% | 0.94% | 1.10% |
| Total Premium First 5 Years | 5.75% | 6.75% | 4.70% | 6.50% |
| Savings with RMIC | 1.00% | 1.80% | ||
| Savings with RMIC on $200,000 loan | $2,000 | $3,600 | ||
To run borrower payment scenarios, try RMIC’s MI vs. FHA Calculator.
While FHA has been the choice of many clients in the last few years, this rate increase and other recent FHA changes make this the ideal time to consider whether Private Mortgage Insurance (PMI) is a better option for high LTV borrowers. RMIC, via iLoan, offers several premium plan options that can provide a better alternative for many high LTV borrowers, especially those with good credit.
| RMIC | FHA | ||
| ► | Offers a choice of single or monthly premium plans | ► | Requires both upfront and monthly MI premium payments |
| ► | MI premiums are cancellable under the Homeowners Protection Act of 1998 and according to investor practices | ► | Upfront premium is nonrefundable unless the borrower refinances into a new FHA-insured loan, and monthly premium is required for at least 5 years |
| ► | Lower rates for loans with lower LTVs | ► | Same premium rates for all loans ≤ 95% LTV |
| ► | Maximum loan amount of $625,000 in most markets; at least $417,000 in all markets | ► | Loan limits as low as $271,050 |
| ► | Allows for a one time buyout of mortgage insurance so that no monthly mortgage insurance remains; click here for more | ► | No buyout available |
Charles Dailey – Branch Manager, Loan Officer, Certified Military Housing Specialist – CA DOC, MN DOC & WI DFI
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The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.
href=”http://phone.charlesdailey.com” target=”_blank”>612.234.7283
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