The annual mortgage insurance premium is due to increase on the 18th April, by 0.25%. For loans whose LTV (loan to value) is <= 95% the rate will increase from 0.85% to 1.10% and if the LTV is > 95% from 0.90% to 1.20% (assuming length of mortgage is more than 15 years).
For those of you that don’t know, mortgage insurance or PMI, is designed to protect the lender if the borrower does not repay the loan. It is required for all FHA loans, where the borrower makes less than a 20% down payment when the loan is taken out.
So what does this mean if you are buying a home? It means that your monthly repayment amount is going to increase. For example, if you have a mortgage for $157,259, your annual mortgage insurance premium will go from $118 to $151.
In order to ensure that you pay the old rate you will need to ensure that you have a case number assigned before the 18th April 2011.
You can read this post about Mortgage Insurance Increase and other posts on my real estate blog.