Mortgage Fees

   Thanks to an ongoing series of fee increases and underwriting tweaks - the most recent of which were announced January 31 - FHA is getting steadily more expensive for you. 
    
   FHA is the Federal Housing Administration, the largest source of low-down payment mortgage money in the country. Its minimum down payment is just 3.5 percent, compared with anywhere from 5 to 20 percent or higher. In the wake of losses tied to bad loans insured during the housing bust years, FHA has been raising its loan insurance fees and backing more loans to applicants with higher credit scores.
    
   FHA's top officials readily admit thet their priority is not growing market share but protecting the agency's multibillion dollar insurance fund reserves and cutting loses. 
   
   Starting April 1, FHA's annual mortgage insurance premiums for most new loans will jump by one-tenth of a percentage point. Other coming changes, but not scheduled to take effect until June 3, include: mandatory "manual" underwriting of applications by borrowers whose total household debt-to-income ratios exceed 43 percent and who have credit scores below 620; and mandatory 5 percent minimum down payments on FHA loans above $625,000 in highcost areas such as California, metropolitan Washington, D.C., and others.
   
   As of June 3, it is rescinding its popular policy of cancelling mortgage insurance premium charges for borrowrs once their loan balance declines to 78 percent of the original amount. This will force FHA customers to pay premiums for as long as they keep their loans, and is in stark contrast to the private mortgage insurance market. 
    
   Bottom line for you: Make sure your loan officer runs the numbers comparing FHA with privately insured conventional alternatives.