Effective June 3, 2013, mortgage insurance premiums (MIP) on FHA loans will be extended. Loans with more than 90% LTV will have MIPs extended through the life of the loan; all others will have MIPs extended to 11 years.
The difference is exorbitant and unfairly punishes those who do not default on their loan:
e.g. $100k house, 3.5% down, 30 year term
Old: MIP cancels after ~9 years: MIP=$12,150
New: MIP does not cancel: MIP=$40,500
e.g. $100k house, 5% down, 15 year term
Old: MIP cancels after ~3.5 years: MIP=$2,450
New: MIP does not cancel. MIP=$10,500
We ask the White House to request that the FHA rescind this decision. Failing that, the FHA could enact stricter lending measures regarding to debt-to-income ratio; or the FHA could enact MIP proportional to credit risk.