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 4.2% 4.34%
15-yr Fixed 3.36% 3.54%
1-yr Adj 2.43% 3.02%
* national averages
Today's News Stories from Bankrate.com®:
 
Ways to avoid bank fees
9/28/2014 7:00 PM
Checking account fees are on the rise. Follow these tips to avoid paying them...Read More
 
2014 Bankrate Checking Account Survey
9/28/2014 7:00 PM
Checking fees are rising. Bankrate"s study shows how high in 25 major U.S. cities...Read More
 
Checking overdraft and ATM fees hit new highs
9/28/2014 7:00 PM
Our survey shows checking fees are rising. How much more are you paying...Read More
 
Need a second chance at managing a checking account?
9/28/2014 7:00 PM
Were you banished from banking? You can open a new checking account, but at what cost...Read More
 
Credit score falls, insurance cost doubles?
9/28/2014 7:00 PM
Don"t let an insurance company hit you too hard over your declining credit score...Read More
 
SJP and Matthew Broderick"s NYC home for sale
9/28/2014 7:00 PM
Live like Carrie did after she married Big. Check out Sarah Jessica Parker"s home...Read More
 
Land deal wasn"t what the seller promised
9/28/2014 7:00 PM
A land deal was too good to be true. Do I have to move ahead with the purchase...Read More
 
5 ways to beat rising fees on checking accounts
9/28/2014 7:00 PM
A Bankrate survey shows checking fees are up this year. Here"s how to avoid them...Read More



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