Florida Mortgage Trends

FHA is raising their costs to New borrowers

August 9th, 2010 9:18 AM by Scott Bray


FHA will lower its upfront premium simultaneously with the increase to the annual premium¹. It is our intention that effective on September 7, 2010, FHA’s upfront mortgage insurance premium will be adjusted down to 100 basis points on all amortization terms and the annual mortgage insurance premium will increase to 85-90 basis points on amortization terms greater than 15 years.

With this authority, FHA is in a better position to address the increased demands of the marketplace and return the MMI fund to congressionally mandated levels without disruption to the housing market.

At current levels, FHA charges borrowers an upfront premium of 2.25%, this will be lowered to 1% which is nice but this cost is only one time.  The monthly expense is .55% this will change to .85-.90% charge.  Estimates are that FHA will profit $300,000 million extra per month off the backs of borrowers.  In essence another tax of on borrowers.  Borrowers today are stronger than borrowers in the past thus let's hurt the ones who can pay to pay the Gov't back for their mistakes on giving loans to the people who couldn't pay in the past. 

Borrowers of new FHA loans won't notice the difference b'c FHA is still the low down payment provider & if you don't have the down payment to go conventional then this is the price you have to pay to own a home today.  It's a small price in the overall big picture...Lowest home prices in a decade & lowest interest rates in decades.....where do I sign up??  - Scott

Posted in:General
Posted by Scott Bray on August 9th, 2010 9:18 AM


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