Federal Housing Administration increases insurance premiums
Government-insured Federal Housing Administration (FHA) loans are a popular low down payment option for many first-time homebuyers. The flexibility offered makes it the second most utilized loan in the United States, according to Mass Real Estate News.
In January, 26.7 percent of Seattle-area purchase mortgages were FHA loans, according to San Diego-based DataQuick. This is up from the 23.7 percent from the prior month, however much lower than the peak experienced in October 2009 at 39.9 percent.
However, starting on April 9 the Department of Housing and Urban Development (HUD) recently announced that it would be raising the Upfront Mortgage Insurance Premium (MIP) for FHA loans from 1 percent to 1.75 percent of the loan amount.
For those buyers search for housing on the MLS listings in Seattle, the increase in MIP may result in the need for greater loan amounts if unable to finance for the additional $5 per month cost, where applicable. First-time homebuyers can still take advantage of these relatively affordable lending options. The price hike will be relatively easy to swallow by most people if they budget accordingly.