Next week brings good and bad news for some borrowers.
Let's start with the bad: Starting Monday, borrowers who take out an FHA mortgage of more than $625,000 will have to pay higher fees.
Now the good: If you already have an FHA loan and qualify to refinance under the FHA streamline program, your loan fees will be reduced significantly on Monday.
The Federal Housing Administration has raised the mortgage insurance premium for large loans twice in the last three months. In April, the FHA increased its annual mortgage insurance premiums across the board for all loan levels. On June 11, it will increase the fee on loans greater than $625,000 again to 1.5 percent of the loan balance, for borrowers who put less than 5 percent down. Borrowers who put more than 5 percent down will pay 1.4 percent of the loan balance per year.
The fee increases make FHA jumbo loans significantly more expensive for borrowers in high-cost areas.
As of Monday, if you get an FHA mortgage for $625,000, you will pay $781 per month in mortgage insurance alone. This amount doesn’t include your monthly mortgage payment. It is added to the monthly principal and interest payment. Prior to the latest increases, you would have paid less than $600 per month in mortgage insurance.
On the other hand, if you are refinancing your FHA mortgage and you meet certain requirements, you'll pay very little in fees. Click here for the details on FHA streamline refinances with reduced fees.
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