To All:
Some may ask what is "FHA", so lets start there.
Below is a breif description from their website. http://www.hud.gov/offices/hsg/fhahistory.cfm
The Federal Housing Administration, generally known as "FHA", provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.
So, FHA insures loans. At any rate with all of the foreclosures FHA lost lots of money as they had to pay out on thousands of loans during the 2006 to 2008 time period so congress has demanded that FHA increase its capital reserves. The only way for them to do that is to raise the insurance premium so starting April 18, 2011 the agency is raising its insurance premium by 1/4 percentage point to 1.15% on all 15 and 30 year loans taken out.
You may say how does that affect me? Most of my clients these days are opting to go with FHA financing for various reason the main two being they either don't have the 20% down payment money to get a convential loan, or they have the cash but due to the instabilty of our economy they hang on to their cash and go with FHA financing which only requires 3.5% down payment.
As always, if you have any questions, please feel free to give me a call or email me.
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