Very recently there was yet another change by the Federal Housing Administration (FHA) that you want to know about if you are considering using FHA to buy a home in the future.
FHA, which has been around since 1934 is basically a government (Department of Housing and Urban Development (HUD)) entity which insures lenders money in cases of loss from default. FHA allows for financing of up to 96.5% of the purchase price of a home or appraised value whichever is lower.
On April 9th the FHA increased its fee structure which gets passed along to the borrowers who use them. FHA charges a one time fee known as Upfront Mortgage Insurance Premium which is increasing from 1% of the loan amount to 1.75%. So for instance on a $100,000 loan request the fee used to be 1% of that $100,000 which translated to a $1000 fee, but now in the same scenario it is 1.75% of the $100,000 loan request translating to a $1,750 fee.
Along with the Upfront Mortgage Insurance Premium, FHA also charges a monthly Mortgage Insurance Premium that is collected with your monthly payment and these premiums too are rising. Premiums on a $100,000 loan request prior to the recent change had an estimated $95.83 monthly mortgage insurance premium, but today that premium would increase to $104.17. Less then a $10 increase for that scenario but the difference becomes more prominent as the loan request increases. Historically, it was just about a year ago (April 4th, 2011) when FHA last increased their premiums.
FHA still offers a great way to buy a home with little money down, but Ocean Communities FCU has some other great products where costs could be much less for you. I suggest you contact one of our experienced mortgage loan officers and ask about our CU Promise Products which offers more features you will enjoy outside of the costs savings.
