That’s right, things are really starting to get deep in this market. As a buyer using this type of loan, you need to understand how these changes will affect you.
To what degree?
Well…here’s the simple breakdown:
As of April 1, the new MMI (mutual mortgage insurance) rate goes up to 1.30 from 1.25 annually for 30 year fixed rate mortgages. The UFMIP (Up Front Mortgage Insurance Premium) stays the same. The time required to keep the mortgage insurance is increasing 11 years and minimum LTV (Loan To Value) is 78%.
Here’s the official documented change:
http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf
Bottom line is you’ll want to refinance when an 80% LTC (loan to value) is reached. But what will rates look like when you’ve built enough equity or your home has appreciated enough that you owe less than 80% of the loan to the value of the house…hmmmm, well it’s just like the Tootsie owl:
The world may never know.
