The Federal Housing Adminisrtation has increased monthly mortgage insurance premiums effective April 18th, 2011. The increase is up .25 basis points from .90 to 1.15.
What does this mean for a future homebuyer wanting to do an FHA loan? An increased monthly payment. Here’s how it is calculated using a hypothetical purchase price of $100,000:
$100,000 less your down payment of 3.5% ($3,500) leaves a base loan amount of $96,500.
Now multiply $96,000 by 1.15% and you get $1,109.75.
Now divide $1,109.75 by 12 and you come up with $92.48.
This is the amount you pay monthly under the new factor. Using the same calculations and the old factor of .90, you would pay $72.38 monthly, which is an increase of $20.10 monthly.
The FHA believes this change is nessessary to maintain their current programs. Since FHA loans are so critical to the recovery of the housing industry, and the housing industry has historically been the primary vehicle of recovery for the economy in general, this appears to be a small sacrifice. I will keep you posted of any future changes!!!
