FHA Mortgages Rise In Price

Another government housing program has had to reduce its subsidies. The free market has been constantly under attach by government intervention over the past 20 years but reality wins out.

FHA mortgages are steadily getting more expensive and private sector mortgages may be a better deal. The FHA is running out of money to subsidize mortgages and as a result it must raise its fees and its standards.

Mortgages with no-down payments were all the rage leading up the 2007 crash as particularly young people without the ability to make a substantial down payment and faced with skyrocketing housing costs made desperate deals to buy a home, convinced that home prices were only going to go higher.

And who weakened the standards for mortgage loans? Principally the federal government out of a desire to increase the percentage of Americans who own their own homes.

Kenneth Harney reports: If you want to buy a house with minimal cash by using an FHA-insured mortgage, here’s some sobering news: Because of an ongoing series of fee increases and underwriting tweaks, those mortgages are getting steadily more expensive and may not work for you.

The Federal Housing Administration is the largest source of low-down-payment mortgage money in the country. Its minimum down is just 3.5%, compared with 5% to 20% or more from conventional, non-government sources. For decades, FHA financing has made homeownership possible for first-time buyers with modest incomes and credit history blemishes.

But in the wake of losses tied to bad loans insured during the housing bust years, the FHA has been raising its loan insurance fees and backing more loans to applicants with higher credit scores. With the latest increases, things have gotten to the point where some lenders wonder whether the agency is trying to move away from its traditional customers.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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