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FHA Increases Mortgage Insurance Premium

Posted by Benjamin Dona on Sunday, February 20th, 2011 at 9:18pm.

FHA Home Loan NewsYou had to know this was coming after Fannie and Freddie announced their home loan fee increases.

Beginning April 18th, 2011, FHA will raise its monthly Mortgage Insurance Premium (MIP) by 25 basis points. For the average FHA borrower, the increase will equate to about an additional $30 per month.

According to HUD's spokesman, the increase was necessary for the following two reasons. First, FHA's capital reserves are currently below a mandated minimum set by the legislature, and the fee increase will help the agency comply with the law. Second, HUD hopes to steer more buyers away from FHA loans and into the private sector by making an FHA loan less desirable.

How commendable on their part.

And so it goes in the mortgage industry. More costs, less choices and government legislators and regulators patting themselves on the back that they are finally bringing things under better control.

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3 Responses to "FHA Increases Mortgage Insurance Premium"

Nicole Arsenault wrote:
Certainly not a surprise, but your blog is the first place that I have heard about it. FHA loans are very popular in my area and while $30 a month isn't earth-shattering, it can be impactful to some families' budgets. Great info and way to stay on top of the real estate market news...

Posted on Tuesday, February 22nd, 2011 at 2:29pm.

Pete Deininger wrote:
I agree with Nicole above. I hadn't heard about this anywhere else and I try to keep my ear to the ground for mortgage news. We also don't see a great deal of FHA mortgages originating here, but our community of local residents who purchase deed restricted affordable housing do use these mortgages. We'll see what kind of impact it has on the people who live and work in this community.

Posted on Tuesday, February 22nd, 2011 at 10:48pm.

Russ in Beaufort SC wrote:
Well, they might not be around much longer anyway. Congress is taking a hard look at how government will be involved in rmortgage lending in the future. But even still...to make any kind of increase right now is bad timing.

Posted on Monday, February 28th, 2011 at 12:07am.

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