New FHA Insurance Premiums Now In Effect
The Federal Housing Administration – FHA – has increased the annual mortgage insurance premium .25% effective Monday April 18, 2011. The increase is based upon one quarter of one percent of the total loan value.
This increase is in response to the congressional mandate that the agency must maintain a 2% capital reserve in it’s Mutual Mortgage Insurance – MNI – fund. The action will help replenish the agency’s capital reserves which have been shrinking over the past several years due to losses on defaulted loans. It is estimated that the agency’s current capital reserves amount to 1/2 percent of outstanding loan balances.
This increase will raise the monthly cost of a $150,000 FHA insured loan by approximately $375 annually, or about $31 per month.
FHA loans have become increasingly popular in the past several years, requiring a minimum of a 3.5% down payment which has proven very attractive to home buyers. A FHA Mortgage Insurance Premium – MIP – is comprised of two elements – an upfront premium which can be rolled into the loan, and a monthly premium.
Wallingford Home Financing
For Wallingford homes sold this year through April 15, FHA financing was used in 15% of the reported sales – 3 out of 20 homes sold. Conventional financing was the method of financing for 12 home buyers, followed by 4 cash transactions, and 1 deal was privately financed.
