FHA Loan Costs Moving Up…..Again?

March 8, 2011 Posted by Andre Hemmersbach

FHA has again decided to increase the cost to prospective homebuyers by increasing the Mortgage Insurance Premiums charged on all FHA transactions.

While FHA still represents the most aggressive lending programs available for low down payment and marginal credit borrowers, coming up with a 5%,10% or 20% down payment in the form of a gift from a relative to avoid FHA may be a better alternative financially. FHA loans require two mortgage insurance premiums while conventional financing only requires one form. FHA currently charges a 1.0% upfront fee that is financed into the loan amount and then charges an additional 0.90% annual premium that is paid by the borrower on a monthly basis. For loan transactions locked after April 18th the annual renewal premium will be increased .25% per year from 0.90% to 1.15% annually. That represents an extra cost of $750.00 annually further pricing out potential homebuyers.

The good news is that rates are still at historically low levels and home prices have dropped to affordability levels not seen in 15 years. With rates and mortgage insurance premiums on the rise waiting to purchase your home any longer could make buying a home more expensive.

If you wish to discuss alternatives to FHA and other low down payment loan programs please call me at your convenience.

About Andre Hemmersbach

Andre Hemmersbach has been working in the mortgage banking business for over 30 year helping people successfully finance their real estate holdings. He can be reached at (310) 540-1330 #137.

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