FHA has raised the monthly mortgage insurance yet again. While the previous mortgage insurance amount was 0.55% early in 2010 it is now 1.15%. That is more than a doubling in one year (it was 0.9% for a while in between too.)
FHA has steadily increased the market share of mortgages from 4% in 2006 to almost 20% in 2010. With an increase in foreclosures (as well as the greater market share) the FHA reserves have decreased steadily. This has made it necessary to increase the FHA mortgage insurance premiums.The mortgage insurance premium is a risk-based fee you pay each month with your monthly payment. The most recent change in premium from 0.9% to 1.15% means an additional $250 yearly cost for the homeowner per $1000 borrowed (the rates do vary some based on the loan amount and type of loan.)
FHA is still the best(and only) loan available for many home buyers (a VA loan is available to some.) The low FHA down payment of just 3.5% usually more than make up for the upfront funding fee (1%) and the monthly mortgage insurance premium.
