FHA Fee Increase

Information is circulating on the Internet questioning the rationale of House-passed legislation authorizing FHA to improve its financial stability by increasing the monthly mortgage insurance premium. The premium would increase to .85 percent from .55 percent. FHA is seeking the increase so it can decrease the upfront premium it charges borrowers, which is 2.25 percent of the loan amount.

This increase will rebuild FHA reserves faster than it otherwise could, and lowering the upfront premium will provide homeowners with greater equity. NAR supports the FHA change and estimates that on average it will increase monthly payments by $33. The Senate still must act on the measure. | MORE INFO

Source: National Association of REALTORS®