FHA announced 1/30/13 new changes to FHA mortgages…
The change that will effect most borrowers is FHA will increase its annual mortgage insurance premium by 10 basis points or 0.10 percent. This will take the Monthly Mortgage Insurance from the current 1.25% paid monthly to 1.35% paid monthly. The exact time period that this will become effective has not been announced.
Additionally, most FHA borrowers will continue paying annual premiums for the life of the loan. Currently the MMI can be cancelled when the loan balance reaches 78% of the original principal balance. This will be changed to not having a cancellation percentage. The exact time period that this will become effective has not been announced.
In summary, FHA loans will continue to become more expensive.
If you are considering purchasing a home using FHA mortgage (3.5% down payment), it may be a good idea to do so in the near future. With the low inventory in today’s market, it may be a while before you find the perfect home and get an accepted offer. If FHA gets more expensive, or eventually exits from the mortgage market all together, a 5% down conventional loan may be the next best option.
For more information and reading, here’s an article on CNN that was just put out today…
Please let me know if you have any questions!