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Mortgages Are About To Get More Expensive

Starting Monday, October 4, 2010 FHA mortgages will end up costing borrowers more in their monthly payment due to an increase in the monthly mortgage insurance fees. Credit score requirements are also changing and will result in fewer qualified borrowers for FHA loans. Over the past few years, the popularity of these mortgages has greatly increased. In 2006 3% of the loans were government backed FHA mortgages. This year, more than 30% of the loans are FHA mortgages. Why the increase in popularity? It’s because the banks have been burned by the housing meltdown are unwilling to lend money unless the government insures the loan. The FHA has decided that in order to recoup some of its’ losses from defaults by borrowers on insured loans over the past few years, they would raise the cost of new loans and reduce its exposure to future defaults by narrowing the borrower pool. So if you are a buyer this is bad news as you will now pay more for an FHA loan provided you meet the higher credit requirements. For Sellers, this is also bad news as fewer buyers will be able to qualify for your home. This leads to one realistic conclusion for many…..price reductions! Read more

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