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Health & Fitness

New FHA rules

New FHA guidelines

New FHA MIP Cancelation Policy Begins June 3, 2013

The Federal Housing Administration also made a second MIP-related announcement -- the agency is reversing its policy which allows FHA-backed homeowners to cancel mortgage insurance premiums once the outstanding principal balance of an FHA loan reaches 78 percent of the original balance.

Going forward, the FHA will disallow the removal of MIP throughout the life of a loan, if the loan's starting loan balance is higher than 90% of its appraised value. This is true for purchases and refinances.

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For loans in which the loan-to-value begins at 90 percent or less, mortgage insurance premiums must be paid for 11 years. This change goes into effect June 3, 2013.

Other Changes To FHA Loans 

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In addition, the FHA will now require lenders to manually underwrite loans in cases in which borrowers have credit scores lower than 620 and total debt-to-income ratios higher than 43 percent. In these instances, lender must also document any factors that support approving the loan.

Furthermore, the Federal Housing Administration will announce higher down payment requirements for jumbo FHA loans, increasing the minimum from 3.5 percent to 5 percent or more.  

Themortgagereports.com (Dan Green) May 21, 2013

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