New FHA Mortgage Insurance Premiums Now in Effect

As of October 4th, FHA loans are cheaper on the upfront cost to obtain, but more expensive on a monthly basis.

Not just for a California real estate loan but nationwide.  The new FHA mortgage insurance premiums are as follows:

The upfront FHA mortgage insurance has been lowered from 2.25% upfront of the loan amount to 1% of the loan amount.

The monthly FHA mortgage insurance premium has been increased from .50-.55% to .90-.95% of the loan balance. 

The increase was needed to offset mounting FHA foreclosures losses and increase its reserves which are dangerously low.

Even though the overall FHA monthly mortgage payment expense has increased, it’s still the best bargain around with a 3.5% downpayment.  The new FHA mortgage insurance rates are in effect for loans which obtain a case number on or after October 4th 2010.

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