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The Good, The Bad, and The UGLY! ~ FHA Changes Again
Friday, August 6, 2010 at 9:31AM 
October 4, 2010 marks a new era in FHA financing. There’s GOOD, there’s BAD and there’s UGLY . . .
Congress has taken quick action and passed H.R. 5981 which gives FHA the authority to adjust it’s annual mortgage insurance premium to strengthen the FHA Mortgage Insurance Fund back to a healthy level. Hmmm . . . translation please.
The GOOD:
FHA’s upfront mortgage insurance premium (which is typically financed) will be reduced drastically from 2.25% to 1.0%. Yip, that’s a good thing!
The BAD:
While they’re decreasing one fee, they are increasing another. The FHA annual mortgage insurance (this is reflected in the monthly payment as PMI) is increasing from .55% to .90%. OUCH!
The UGLY:
If all that made absolutely no sense to you, ah don’t be discouraged, it doesn’t make sense to our own Congress at times. Here’s the skinny . . .
On a sales price of $200,000 using FHA financing with the minimum down payment of 3.5%, the home buyer’s total monthly payment increases $44 when the good and bad are compiled. $44 per month is the equivalent of $8000 in sales price reduction.
The CONCLUSION:
As of October 4, 2010, home buyer’s utilizing FHA financing will qualify for less. Basically you just went from 2,000 square feet of living space to 1,800 – ahhh, your kids can share a room, right?
There’s time to secure the current lower total monthly payment, so don’t delay!!!! Who ya gonna call, Ghost Busters . . . no, Pamela Crim!