West Knoxville Home Buyers: FHA to Raise Mortgage Insurance Premiums
For many people buying homes in West Knoxville, FHA Mortgages are a common source of financing. Starting in April, West Knoxville home buyers obtaining FHA loans, will see an increase in mortgage insurance premiums. The Federal Housing Administration will increase mortgage annual and up-front mortgage insurance premiums, in order to help repair its emergency help fund.
The FHA has two tiers of mortgage insurance — annual mortgage insurance and up-front mortgage insurance. Up-front mortgage insurance is collected at closing and can be done in a matter of ways, it can be added to the loan amount or added into closings costs. Annual mortgage insurance, in contrast, is added into each monthly loan amount. The FHA uses these mortgage insurance premiums to help pay lenders if a borrower defaults on their loan.
So what exactly does this increase in mortgage insurance premiums mean for West Knoxville home buyers? Read on below to see the break down of what the increase in premiums will mean for West Knoxville home buyers.
Annual Mortgage Insurance Premiums:
- For all loans taken out on or after April 18th, 2012, all borrowers with a 30 year FHA loan, will see an increase in the premium from 1.1% to 1.15% of their loan amount.
- This does not apply for loans already in place.
- For a borrower with a loan amount of $157,000, it will be an increase of about $33 per month.
Upfront Mortgage Insurance Premiums:
- Starting April 1st, 2012, premiums will increase from 1% to 1.75% of the loan amount.
- This does not apply for loans already in place
- For a borrower with a loan amount of $150,000, it will be about $5 per month.
- Will not affect the cost of FHA streamlined refinances.
While an increase in anything can be difficult to accept, the FHA is using the increase in premiums to help build up its emergency help fund. With this increase in premium, the FHA will see an increase of $1 billion into its yearly revenue.
So what do you think of this increase in premium?