Getting an F.H.A. mortgage will cost more

From the New York Times, Lynnley Browning writes about the increase in F.H.A. insurance premiums scheduled to take effect for loans taken out on or after April 18, 2011.

“FEDERAL Housing Administration mortgages, the government-insured loans that have surged in popularity in recent years, will be getting slightly more expensive this spring.

“The F.H.A. announced this month that it was raising the annual mortgage insurance premium for borrowers by a quarter of a percentage point — to 1.1 or 1.15 percent of the loan amount for 30-year fixed-rate loans, and 0.25 or 0.50 for 15-year or shorter-term loans.”

While the F.H.A. is calling the rise a “marginal increase,” “industry experts say that some consumers, especially those considered marginal borrowers, may now be prevented from buying or refinancing a property.”

This is the second change in premium rates in the past 12 months, having last gone up in November 2010.

“The increase does not apply to F.H.A. loans already in place, or to F.H.A. reverse mortgages or home-equity conversion (HECM) loans.”

The raise is necessary because F.H.A. reserves have fallen below required levels.

Read more, F.H.A. to Raise Insurance Premiums.

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