FHA Loans Are Going to Cost You More Beginning April 5!

[TedTrent]

I just wanted to share some information about changes to the
FHA's home loan program that will begin to go into effect beginning
on April 5, 2010 and will cost borrowers more money after that date.
This information is important for any home buyers who are currently
looking for a home and plan to get a mortgage underwritten by FHA,
which currently accounts for nearly 40% of all borrowers.

The changes are as follows:

1. Required upfront mortgage insurance premium increases from
1.75% (of loan amount) to 2.25%. (Paid at Closing)
2. Seller's contribution of closing costs and other concessions
to the Buyer is reduced from 6% to 3% of purchase price.
3. FHA will begin to require a 10% down payment for borrowers
with credit score below 580.
4. FHA is seeking congressional legislation that will increase the
monthly mortgage insurance premium that is required, on top of
the upfront mortgage insurance premium mentioned in #1 above.

The increase in upfront mortgage insurance premium will probably
add around $50 to $100 to monthly mortgage payments for the
average FHA borrower. Additionally, the reduction in seller
concessions to 3% will on average cost some borrowers to bring an
additional 1% to the closing table.