Last month, the Federal Housing Administration (FHA) made two major changes to the mortgage insurance that is paid by home buyers seeking FHA-insured loans. The first change raises the borrowers’ monthly insurance premium. It used to be approximately .5% of the loan balance, but is now approximately .9% of the balance. The other change lowers the insurance premium borrowers must pay in a one-time, up-front sum. It used to be 2.25% of the loan balance, but is now 1% of the loan balance. While some may be happy to see the decrease in the up-front payment, it does not offset the increased cost of the monthly balance. This could make things difficult for loan seekers who are already in precarious financial positions.
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