FHA Mortgage Rates Remain Below 4%…For Now…


FHA loan rates have stayed relatively steady, and below 4.00% on average last week, though fees on these government backed loans are set to increase later this year, according to a mortgage rate research website. In December 2011, Congress voted to offset the expense of a payroll tax extention with an increase in mortgage fees for conventional loans sold to Fannie Mae and Freddie Mac, and for FHA loans backed by the Federal Housing Administration.

For FHA mortgages the additional fee will be in the form of a 0.1 percentage point increase in the mortgage insurance premium paid by mortgage holders. The FHA has yet to release information on when the fee increase will take place.

Though the fee increase is small, it will mean a slightly higher payment for new FHA borrowers after it goes into affect. Current FHA mortgage holders will not be impacted, nor with those who close their loans before the implementation of the increase. If an existing FHA loan is refinanced into a new Fannie Mae, Freddie Mac, or FHA mortgage after the fee rises it will be in place on the new loan.

An increase of $10 to $20 per month probably isn’t going to make the difference of someone qualifying for a loan, or change whether it’s affordable, but with rates as low, or close to as low as they have ever been, and some additional costs on the horizon, it is certainly advisable to consider an FHA refinance or purchase loan now rather than waiting.

If I can help in any way or answer questions, please don’t hesitate to contact me. Getting pre-approved for a home loan doesn’t cost anything but your time.

Aundrea Beach-Greco

Mortgage Advisor, CMP, CMPS™

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Residential Mortgage Services

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