San Diego Housing Market News and Analysis
User Forum Topic
Submitted by HLS on August 19, 2013 - 11:03am
**WARNING** FHA has become MUCH more expensive. ANY new FHA loan is going to have mortgage insurance FOR THE LIFE OF THE LOAN~
Applications for FHA single-family loans dropped off a cliff in June as a regressive mortgage insurance policy kicked in early in the month and borrowers were dealing with rising mortgage rates.
Loan applications fell nearly 50% in June from the prior month.
The new report shows that FHA applications fell to 93,700 in June from 182,400 in May. Applications for FHA purchase mortgage loans fell to 57,650 in June, down 43.5% from the prior month.
Starting June 3rd, a new policy makes FHA loans more expensive longer-term. Mortgage insurance on new FHA loans can no longer be canceled when the LTV ratio hits 78%. FHA borrowers must pay a 1.35% annual premium over the life of the loan. (With private MI, the annual premium is cancelable.)
On April 1, FHA raised the annual premium 10 bps to 1.35%. And loan applications filed in April fell to 118,200 from 221,600 in March.
FHA has increased premiums five times over the past two years and according to the FHA commissioner “we are clearly at a tipping point here,If we increase them more, we would actually shut out additional homebuyers,”
~Active forum topics~