FHA mortgage-insurance premium rises next week
Planning to get an FHA mortgage? Keep in mind that the annual mortgage-insurance premium for new loans is set to increase April 18 -- next Monday.
The extra charge comes to about $42 a month -- $500 a year -- for a $200,000 mortgage with a 30-year term.
This won't affect anyone who already has a loan, mind you, just folks taking out new ones. And if FHA assigns a case number to your loan application before April 18, you'll be under the current fee system. (Assuming I'm reading the FHA guidance to the mortgage industry correctly, you can get a case number early on in the loan application process.)
In other FHA news, U.S. Sen. Ben Cardin of Maryland says the agency is charging borrowers for a full month of interest when they pay off their mortgages by refinancing or selling even if they do so just a few days into the month, and he wants that stopped.
Syndicated real estate columnist Kenneth Harney says industry folks contend that borrowers get a small break on their initial interest rates in exchange for the back-end charge, while critics such as the National Association of Realtors argue that the back-end charge is a substantial one-time hit averaging more than $500 per borrower. People with conventional loans pay interest only up to the day that they're refinancing, selling or otherwise paying the mortgage off.