More changes are coming for FHA mortgages and like conventional mortgage changes, they are going to get more expensive. Effective with all FHA case numbers ordered on or after April 18, 2011 the monthly mortgage insurance premium is going to increase by 25 basis points. This is due to the ongoing efforts to strengthen Federal Housing Adminstration's capital reserves.
What this means is that if you are putting 3.5% down on a FHA mortgage today, your monthly mortgage insurance premium is .90%, it will be going to 1.15% on April 18th. If your mortgage is $200,000, that means an additional $41 per month for your mortgaqge insurance. If you are putting 5% down, the mortgage insurance goes from .85% to 1.10%.
The upfront mortgage insurance premium of 1.0% is not changing, just the monthly premium.
This is equal to roughly a .375% increase in interest rates. The difference here is that we know about this now and we never know when interest rates will change. So for anyone that is thinking about buying a home now – or anytime this year, it makes sense to look at doing something now. The costs of buying a home have been getting higher and with this change coming in April, you can save yourself some money by buying sooner than later!