Hey FHA borrowers!
Starting April 18 all new loans will cost more because of an increase in mortgage insurance premium (MIP) fees. What does that mean for a typical borrower? On a house with a sale price of $163,000, a 3.5 percent downpayment ($5,705) and a 30-year fixed-rate mortgage, your mortgage insurance premium will rise $33 per month to $151.
A recent HUD mortgage letter explaining details of the program says that the increase is necessary to help offset the growing costs - and risks - that the FHA has incurred as loan volume grows. As conventional lending standards have become more stringent, FHA has taken on a greater share of the mortgage market. FHA, the Federal Housing Administration, helps borrowers who might not otherwise be able to qualify for a conventional mortgage by providing a government guarantee for the lender.
MIP is HUD/FHA's mandatory version of private mortgage insurance (PMI), which is required by Fannie Mae and Freddie Mac for borrowers with conventional mortgages and not a lot of equity