Real Estate Buzz-
Why buy a home before April 1st, 2012? In an effort to bolster its capital reserves, the Federal Housing Administration (FHA) is planning to increase insurance premiums it charges borrowers.
Beginning April 1, the agency, which is the largest insurer of low-down payment (3.5%) mortgages, will raise the up-front insurance premium it charges borrowers by to 1.75% of the base loan amount.
In addition, annual insurance premiums will go up 0.1 percentage point.
FHA said the increases are necessary to replenish the agency's declining capital reserves, which fell below the level mandated by Congress back in 2009. Further red flags were raised in November when the agency's annual report warned that if home prices continued to drop in the coming year, the agency's losses could exceed its reserves.
"After careful analysis of the market and the health of the [Mutual Mortgage Insurance] fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market," said acting FHA commissioner Carol Galante.
Borrowers will be able to include the higher up-front fees into their mortgage balance, which should help borrowers better afford the cost. Combined, the higher up-front fees and the 0.1 point premium increases are expected to add about $5 to the average monthly mortgage payment for FHA loans, according to the agency.
Know someone who needs to sell or buy a home? Dial Darla 614-395-1516 to begin the road to owning real estate!
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