Good news for FHA Home Buyers! FHA is going to maintain its current standards regarding the mortgage insurance premiums. What does this mean?
When using a FHA loan, a buyer must pay an Up Front Mortgage Insurance Premium (UFMIP) as well as a monthly mortgage insurance premium. These charges were scheduled to increase in cost on October 1, 2009, however HUD has decided to maintain current standards which should afford FHA buyers the ability to qualify for a higher loan amount.
Mortgage Insurance is not designed to protect the home buyer. It is only there protect and insure the bank and FHA in the event of default. Even so, FHA mortgage insurance will continue to provide lower rates with lower down payments in comparison to higher rates and higher down payments for conventional loans.
The bottom line to this news is that by maintaining lower premiums, FHA will be used by both first time home buyers and others to continue the increase in home sales at least through 2010.
Tuesday, August 4, 2009
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