Federally supported mortgages, last year, got more costly. In April of this year, the cost will go up all over again. This increase will increase the overall expense of low-cost mortgages. Article resource – Cost of FHA loans set to increase again by MoneyBlogNewz.
The place of FHA loans
Specific mortgages get home loans from the Federal Housing Administration. The FHA doesn't give bad credit personal loans. Instead, it insures mortgages for other loan companies to lend. A down payment between 3 and 6 percent is required instead of the 10 percent standard mortgage down payment with an FHA-insured loan. FHA mortgages could be taken out for any amount up to $729,750. There are many that want to own a home but cannot make a down payment. Typically they can nevertheless make a mortgage payment though.
How much you pay for FHA loans
Borrowers don't have to worry about the difference between FHA loans and regular mortgage loans. There isn't much of a difference. Borrowers are required to pay mortgage loan insurance with FHA loans so that the federal government will repay the lender if something goes wrong. For many years, FHA loans required a 0.5 percent premium be paid as mortgage insurance. The amount went up 0.9 percent in 2010. Now the total is at 1.15 percent. This was after another 0.25 percent increase in April. FHA borrowers have to pay 1.15 percent additional of the mortgage. This can be added to monthly payments. For those who have a $157,000 mortgage, this can be a pretty large increase. It means $400 a year extra.
FHA has good and bad about it
The FHA wrote mortgage insurance for the first quarter of 2011 for $72.1 billion in loans. The FHA wrote more refinancing loans since There are fewer loans than in previous years. It is not all bad news though. There are fewer defaulting FHA loans. There is also bad news. In order to stay solvent, the FHA will have to increase rates still. Borrowers should expect rise in mortgages. This will occur on average. This could show a recovery in the economy or that mortgage lending nevertheless makes the federal government nervous. Either way, the boon of low interest rates is sure to end soon.
Tampa Bay Times