FHA Loans Getting More Expensive – Again

Bill HR 2981 was passed by both the House and Senate, paving the way for higher charges for FHA borrowers.  The majority of FHA loans are 30 year mortgages with a loan-to-value of at least 96.5%, which will see an increase in the monthly fee from 55 bps to a whopping 90bp, but on the flip side will see a reduction in the upfront mortgage insurance premium (UFMIP) from 225 basis points down to 100 basis points.

So in other words, the up front fees (this amount is often rolled into the loan balance) will go down, but the monthly charge goes up, hampering the monthly affordability for many borrowers.
The change is due to go into effect September 7, 2010.

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