Homeowners who have their loans through the Federal Housing Administration must make larger payments starting this month.
Since the 1930s, FHA has existed to help people with poor credit or small down payments buy homes, and the program has become increasingly important in recent years because of the economic recession, but the program has needed some adjustments to help increase revenue. The solution: increase monthly payments for governor.
For now, FHA is increasing mortgage payments half a percent, although they have permission to increase them a full percent.
“Their increase in that is probably going to cost the average borrower anywhere from $30 to $50 a month in increased cost each month,” said Dave Flohr of the North Dakota Housing Finance Agency.
However, FHA is also reducing the required upfront payment by about 1.25 percent, which is supposed to help balance the monthly payments, but Housing officials say most borrower are concerned about their monthly payment not the down payment.
“To FHA`s credit, they recognized that they didn’t want to go to Congress to get an appropriation of funds,” Flohr said. “They wanted to stay self-funded and this is their attempt to do that, to try and strike that balance.”
FHA can still be a helpful option for many people wanting to but their first home, but you need to know all of your choices.
“Right now, I’d just say, go over the numbers with your home loan specialist,” said Joe Sheehan of Cornerstone Bank in North Dakota. “Make sure that your loan officer is presenting you all your options and getting the best affordable payment you can get.”
Experts said borrowers need to be aware the FHA could still raise monthly payments another half a percent.