FHA Loan changes will cost you more money
The Federal Housing Administration (FHA) announced January 30, 2013 that it will raise premiums on new mortgages it insures.
The changes will limit some borrowers with lower credit scores the ability to qualify for loans, as well as requiring a higher down payment for loans over $625,500.
The agency is hoping these higher rates will avoid a taxpayer bailout. FHA reported a $16.3 billion deficit to Congress in November, which raised the fear that the agency will require a taxpayer bailout for the first time in it’s 78 year history.
Some of the upcoming changes announced are:
FHA will raise the annual mortgage insurance premiums paid by borrowers on most new FHA loans by 10 basis points or 0.1 %. The agency expects this will add $13 per month to the average borrower’s monthly payment. FHA will also increase premiums on jumbo mortgages ($625,500 and above) by 5 basis points or 0.05 % to 155 basis points, the maximum currently allowed by law.
FHA will reverse a policy that automatically cancels the required premium payments after the loan reaches 78% of their original value. Most FHA borrowers will now have to continue paying annual premiums based on the unpaid principal balance for the life of the loan.
FHA will propose an increase in the minimum down payment of loans between $625,500 and $729,000 to 5%, the down payment has been 3.5% for most of it’s loans .
There have also been some changes to borrowers with lower FICA scores and higher debt ratios, as well as a crack down on Lender’s who promote that anyone can qualify for an FHA Loan 3 years after a foreclosure.
To read more on the new FHA changes, see the article at Inman News
Please Note: The rates and information contained in this article is accurate at the time of this posting. Please verify accuracy with a Pueblo mortgage lender for your particular circumstance.