The Administration has released the budget for the next fiscal year and included in this budget is a soon to be announced increase in insurance premiums for Federal Housing Administration mortgage loans.

In the last few years, FHA has become the fastest growing source of financing of home purchases and FHA has been a popular choice for refinancing as well. One reason for this popularity is the fact that FHA requirements are more lenient than conventional loans in several respects. In addition, this past year Congress extended higher loan amounts for FHA mortgages, but did not do such for conforming mortgages.

The increase in FHA insurance will cost homebuyers and those who want to refinance from .10% to .25% more in premium. This could cost a homebuyer more than a hundred dollars per month, depending upon the cost of the home.

The message is clear. Rates are still at record lows and home prices are as affordable as they have been in years. If you are thinking about purchasing or refinancing, now is the time to act before FHA implements these fees. Time is of the essence because lenders will become very busy with those who are taking advantage of today’s market and want to beat the increase!