New FHA Fees Start In September- Not saving you money.

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The HUD will shortly announce new FHA mortgage requirements that will start as of September 7th for FHA loans made on or after that date.

With the passage of H.R. 5981 the changes for most borrowers will look like this:

___ The up-front mortgage insurance premium will be REDUCED from 2.25 percent to 1.00 percent. For a $200,000 FHA loan the upfront MIP will drop from $4,500 to $2,000.

___ The annual mortgage insurance premium will be INCREASED from .55 percent to .85 to .90 basis points. For an FHA loan with a balance of $200,000 the monthly fee will change from $1,100 divided by 12 ($91.67) to as much as $1,800 divided by 12 ($150).

HUD has the authority under FHA Reform Act of 2010 to raise up-front premiums to as much as 2.25 percent and annual premiums to a high of 1.55 percent. These changes were made to assure that the FHA would have the authority in hand if higher premiums were needed but there was no inclination to raise fees to such levels.

$300 Million Per Month

The changes will significantly increase FHA premium receipts.

Stevens says the “bill gives FHA the authority to adjust its annual mortgage insurance premium, yielding approximately $300 million per month in value to the FHA Mutual Mortgage Insurance Fund at a time when its reserves are perilously low.”

This is a bunch of money, an additional $3.6 billion per year to shore up FHA reserves.

The FHA loan program has been running in the black despite tough market conditions around the country. The new fee schedule will help bulk up FHA reserves in case things turn sour.

So in turn does this benefit you the consumer or FHA? The answer FHA, so if you are in the market to buy a home my recommendation would be to do so ASAP. If you need a fast pre approval please feel free to call or email me here.

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