FHA increases buyers’ fees

WASHINGTON – Feb. 28, 2012 – Acting Federal Housing Administration (FHA) Commissioner Carol Galante announced a new premium structure for FHA-insured single-family mortgage loans: FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount. Upfront premiums (UFMIP) will increase by 0.75 percent.

The premium changes will impact new loans insured by FHA beginning in April 2012. Details will soon be published in a Mortgagee Letter to FHA-approved lenders.

“After careful analysis of the market and the health of the Mutual Mortgage Insurance Fund (MMI) fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” says Galante. “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”

The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent for case numbers assigned on or after April 1, 2012. FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500 assigned on or after June 1, 2012.

The UFMIP will increase from 1 percent to 1.75 percent of the base loan amount, which FHA says will apply regardless of the amortization term or LTV ratio. FHA will still allow buyers to finance this charge through the mortgage. It’s effective for case numbers assigned on or after April 1, 2012.

FHA estimates that the increase to the upfront premium will cost the average borrower about $5 more per month.

Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes announced today.

the purchase agreement and one after the inspection is completed. Read more.

Today's Rates

Mtg Loan Rate APR
30-yr Fixed 3.92% 4.05%
15-yr Fixed 3.08% 3.24%
1-yr Adj 2.41% 2.99%
* national averages
Today's News Stories from Bankrate.com®:
 
7 common retirement investing mistakes
10/23/2014 7:00 PM
Investing in hot sectors without a strategy could throw ice water on your plans...Read More
 
5 warnings for credit card co-signers
10/23/2014 7:00 PM
Agreeing to co-sign for a loved one may feel good, but it puts your credit at risk...Read More
 
5 alternative investments for fat returns
10/23/2014 7:00 PM
Looking for a higher yield than savings or CDs offer? Try these out-of-the-box ideas...Read More
 
My home offer was accepted; how can I back out?
10/23/2014 7:00 PM
A home seller can sue you for walking away from a contract, but there are plenty of loopholes...Read More
 
Video: Improve your credit score
10/23/2014 7:00 PM
Follow these steps to raise your credit score to qualify for the best interest rates...Read More
 
4 home-selling horror stories
10/23/2014 7:00 PM
There"s something about selling a house that brings out the weirdness in people...Read More
 
10 safest cities for your car
10/23/2014 7:00 PM
In some metro areas, the odds are incredibly low that your car will be stolen...Read More
 
5 insurance strategies for nontraditional couples
10/23/2014 7:00 PM
You"re not considered legally married? You two may still enjoy insurance perks...Read More
 
What can I do to stop my car from being stolen?
10/23/2014 7:00 PM
Lower the odds of becoming a victim of auto theft by using some common sense...Read More
 
Can I recover money from 1976 bond scam?
10/23/2014 7:00 PM
Hoped to get rich, but got cold feet? Recover funds from a savings bond purchase scam...Read More



This service is supplied by Bankrate.com and is protected by copyright and owned by Bankrate.com.