FHA Loans Get Expensive

One of the benefits of FHA loans over the years was the low monthly mortgage insurance premiums required. Well, that's changing yet again. The monthly Mortgage Insurace was raised last year from 0.55% to 0.9% and starting with case #'s pulled in April of 2011 it will go up again to 1.15%

What does this mean for someone buying a home?
Say you want a home for $250,000 - FHA requires a down payment of 3.5% and the monthly mortgage insurance will go up from $184.64 per month (at 0.90% factor) to $231.20 (at a 1.15% factor)per month.

The net result is that borrowers will pay $46.56 more per month for the same loan.

I'm not arguing that the premium shouldn't be higher. After all, FHA is the only institution that provides the kind of financing they do at the low rates they offer. If these loans made sense, banks would already be doing them. The fact of the matter is they don't make sense - therefore, the government is the only "bank" doing them.

What I find frustrating is that the government is simultaneously claiming to do all they can to fix the housing mess, but they raise the mortgage insurance on FHA loans which comprise a LARGE part of all lons being closed these days.

Why don't they get to work and fix the "loan modification" scham that's funneled billions from government coffers and produced minimal results.

Please post any comments below!!