In April, FHA Mortgage Insurance Premiums increased for all loan amounts, and it looks as though another increase has taken place. On June 11, 2012, monthly premiums went up another 25 basis points to 1.50%. This applies to buyers who are putting down between 3.5% and 5%. For those who are able to pay out more money up front–those buyers with 5% equity or those with greater than a 5% down payment–will see a smaller increase at 1.40%.
The increase equates to roughly .30%, and when you’re talking about hefty loan amounts, this increase is costly. For example, a borrower with a $625,500 loan would have paid $599.44 for mortgage insurance prior to April 9. Now, that same borrower is paying $781.86. In just over two months, that’s an increase of nearly $200.00.
Additionally, FHA loans have seen an increase in fees. While these don’t necessarily mean your interest rate will increase, if your credit score is less than 680, you will be subject to the increased fees. The increase applies to both FHA and VA loans. Those with a credit score of 720 and higher will see a credit of .25%, however, and that can be used to lower your interest rate.
The FHA Reform Act of 2010 permits the FHA to increase monthly mortgage fees up to 1.55%, so fees could increase even more in 2012.
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