Nancy Hill
Nancy Hill
Solution Partners NW

FHA Financing - Buyers Better Make A Deal Soon!

Posted on March 27, 2011
The Federal Housing Administration (FHA) made some important changes to its lending program.  FHA is currently financing about 1/3 of all home mortgages in the U.S..  These loans have been popular with borrowers who lack a large down payment yet they have the income to pay the mortgage.   Most FHA home loans require only a 3.5% down payment. 
 
What has occurred with the increased use of FHA loans is increased risk.   With so many of the the home sales dependent on FHA financing, the government has decided to increase the monthly premium for home mortgage insurance.  This insurance is paid by the borrower.  It protects the FHA from losses due to home default.  
 
Here's an example:
Before:  $185 MI monthly
After:  $271 MI monthly
 
This is an increase of $86 per month.  That means the borrower qualifies for less of a home mortgage by $18,000 as they will need an additional $86 for mortgage insurance premium.  
 
This increase goes into effect on April 18, 2011.  Anyone considering buying a home with an FHA loan better consider getting a deal put together before that date.  
 
www.BestKingCountyRealEstate.com
 
 

 
 
 

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