How will the Rise in FHA Premiums Effect You? Ventura Homes for Sale

by Gary and Lisa Schoeffler on April 4, 2011

in Buyers, Latest News

In part due to the increasing share of new mortgages being financed under its auspices, the Financial Housing Administration (FHA), is once again raising costs on its annual mortgage insurance premiums, effective April 18th.

The increase, which will comprise of a 0.25% rise in costs for both 15 and 30 year fixed-rate mortgages, is part of an FHA adjustment to its annual mortgage insurance premiums. The change will result in an increase of about $250 yearly (or about $21 per month) for every $100,000 borrowed.

While not a large increase in and of itself, the increase is the third that the FHA has approved for mortgage insurance premiums in the past year, citing a need to bolster its cash reserves from 0.5% up to the 2% set by federal mandate.

FHA loans have gained in popularity over the past few years, as low home prices and a dearth of funding options have attracted younger and first-time homebuyers to the FHA program’s relatively lenient underwriting terms. With a minimum downpayment requirement of only 3.5%, the FHA has been a go-to resource for borrowers lacking the substantial downpayment now preferred by many private lenders.

As stated in the article, “the rise in FHA borrowing costs is anticipated to raise costs in the private sector as well, resulting in higher mortgage expenditures across the board.” It is the trickle down effect. Those higher costs are passed on the the consumer. These changes are scheduled to take place April 18, 2011.

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Post by Gary and Lisa Schoeffler

Gary and Lisa Schoeffler are Ventura Real Estate Professionals specializing in residential real estate. Their expertise in helping both buyers and sellers is widely recognized in Ventura County. How can they assist you today? Wondering what the market is like? Call them, they will be happy to talk with you about it. 805-320-4472

Gary and Lisa has written 371 articles.

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