The Federal Housing Administration is raising the annual insurance premium on new loans it insures starting April 18.
Premiums for new 30- and 15-year FHA-backed mortgages will increase by one-quarter of a percentage point. The annual premiums, which are spread over monthly mortgage payments, will range from 0.25% to 1.15% of a loan amount, up from 0% to 0.9%. The rate you get depends on factors such as the loan amount and duration. Existing loans won't be affected.
If you have a $175,000 loan balance (the average for FHA loans), for example, you'll pay an extra $23 a month, says Bob Ryan, the FHA's deputy assistant secretary for risk management. With a $200,000 loan, you'll likely pay around $30 extra. For a $100,000 loan, it's about an extra $15. Monthly premium payments will decrease as your loan balance drops.
Borrowers also pay a 1% upfront mortgage-insurance premium that can be rolled into the loan amount when they take out an FHA loan. That premium remains unchanged.
The premium increase is part of the FHA's efforts to bolster its capital reserves. By law, the FHA is required to have a 2% cushion, but it has dropped to 0.5%, Mr. Ryan says.
FHA loans typically attract younger, first-time buyers since they require a down payment as low as 3.5%, offer lower interest rates and are usually easier to qualify for.
source: http://online.wsj.com
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Premiums for new 30- and 15-year FHA-backed mortgages will increase by one-quarter of a percentage point. The annual premiums, which are spread over monthly mortgage payments, will range from 0.25% to 1.15% of a loan amount, up from 0% to 0.9%. The rate you get depends on factors such as the loan amount and duration. Existing loans won't be affected.
If you have a $175,000 loan balance (the average for FHA loans), for example, you'll pay an extra $23 a month, says Bob Ryan, the FHA's deputy assistant secretary for risk management. With a $200,000 loan, you'll likely pay around $30 extra. For a $100,000 loan, it's about an extra $15. Monthly premium payments will decrease as your loan balance drops.
Borrowers also pay a 1% upfront mortgage-insurance premium that can be rolled into the loan amount when they take out an FHA loan. That premium remains unchanged.
The premium increase is part of the FHA's efforts to bolster its capital reserves. By law, the FHA is required to have a 2% cushion, but it has dropped to 0.5%, Mr. Ryan says.
FHA loans typically attract younger, first-time buyers since they require a down payment as low as 3.5%, offer lower interest rates and are usually easier to qualify for.
source: http://online.wsj.com
To receive updates right into your inbox, please don't forget to subscribe:
Related Posts:
FHA Loans Get More Expensive
MERS and more about loans
Loan-Modification Options for the 'Underwater'
Bank of America Revival and Mortgage Issues
This is usually taken to be the purchase price of the property. If the property is not being purchased at the time of borrowing, this information may not be available.
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