On April 1st the Federal Housing Administration is increasing both upfront and annual premiums for its insured single family loans. The annual increase will be .10 % to make the annual mortgage insurance premiums 1.25% mandated by the Temporary Payroll Tax Cut Continuation Act of 2011.
But that’s not all! FHA is exercising its authority to raise other fees for the specific purpose of strengthening FHA’s Mutual Mortgage Insurance Fund (MMI).
The upfront premium, which went down in 2010 is going right back up to 1.75%. A .75% increase from the current 1% premium. This change will happen on all FHA loans regardless of amortization terms. Borrowers WILL still be able to finance this charge.
But that’s not all…. June 1st there will be one last increase of an additional 0.25 percent on FHA-insured loans with principal balances over $625,000 bringing the total hike on “Extended Loan Limit High Balance” FHA to 0.35 percent.
Acting FHA Commissioner Carol Galante said, “After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market. These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”
FHA estimates that the premium changes will, in the aggregate, add more than $1 billion to the MIF based on the current volume projections through Fiscal 2013.
For questions on FHA financing Contact Wendy Werdmuller of Team Werdmuller at Wendy@garrick.biz NMLS# 242612 DRE Lic #01826247