As announced earlier this year, FHA has now made official its plan to increase mortgage insurance premiums for case numbers after October 4, 2010. For loans with a loan-to-value (LTV) of over 95% (which is most first time buyers, in my experience), the monthly fee increases from .55 bps to a whopping .90 bps.
How does this translate for the typical borrower with FHA’s minimum 3.5% down payment? On a $275,000 loan, the monthly payment is about to become $70 higher per month! This makes payments less affordable for many first time buyers, and adds ‘insult to injury’ following the expiration of the first time home buyer credit.
If you’re on the fence about making an offer on a home, I’d suggest pulling the trigger before the end of September so that you can get the loan’s case number assigned prior to this hefty increase in fees.
Learn More: Attend a free first time home buyer class