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Mortgage Applications for FHA Loans Increase Ahead of Higher Fees

Written by on Tuesday, 27 March 2012 7:00 pm
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It is not unusual for mortgage applications to increase during the spring season since more people begin to house hunt during that time. According to the U.S. Mortgage Market Index report from Mortech, Inc. and Mortgage Daily, activity for FHA loans increased 11 percent from the previous week. This increase comes ahead of the higher FHA costs which are scheduled to begin April 1st, with another increase scheduled for June, 2012 for FHA mortgages with higher loan limits . Freerateupdate.com's weekly survey of wholesale and direct lenders show that current FHA 30 year fixed mortgage rates are at 3.375%, FHA 15 year fixed mortgage rates are at 2.875% and FHA 5/1 adjustable mortgage rates are at 2.875%. FHA has increased the annual mortgage insurance premium by .10 percent on all FHA loans effective with case numbers issued on April 1st. This annual premium is paid each month with the mortgage payment. Also on April 1st, an increase of .75% for the FHA upfront mortgage insurance premium, which is paid at closing, is also scheduled to begin. Many borrowers who may have been taking their time with getting in a completed FHA mortgage application, are moving forward in order to avoid these increases.

While home prices are still low, the Commerce Department reported that the median sales prices of new homes rose more than 8 percent. This is significant information for consumers who are looking to purchase a home while costs are down. Current 30 year fixed mortgage rates are at 3.750%, 15 year fixed mortgage rates are at 3.000% and 5/1 adjustable mortgage rates are at 2.375%. These are the lowest mortgage rates available with 0.7 to 1% origination fee. Conforming mortgages are stricter than FHA loans and require strong credit in order to receive approval. Significant assets are also necessary to cover the costs of the down payment and required reserves. Existing borrowers now have Harp 2.0 available which greatly reduces the paperwork and verifications that are normally required. Since Harp 2.0 is for underwater borrowers, it does not require an appraisal in most cases.

Current jumbo 30 year fixed mortgage rates are now at 4.625% after a high of 4.750%. Jumbo 15 year fixed mortgage rates are at 3.375% and jumbo 5/1 adjustable mortgage rates are at 2.500%. These are the lowest jumbo mortgage rates available with 0.7 to 1% origination fee to well qualified borrowers. Although FHA loans have a high loan limit of $729,750 in high costs areas, many borrowers still opt for regular jumbo mortgages provided they can meet the stricter guidelines.

MBS prices saw some movement this past week, but eventually settled leaving low mortgage rates intact. Reporting released from The Census Bureau and HUD shows that Housing Starts for February declined 1 percent from the previous month, although Building Permits were higher than expected. New Home Sales also decreased in February. The National Association of Realtors reported that existing home sales saw a decrease of 0.9 percent in February. U.S. Jobless Claims fell lower than expected to the lowest level since February 2008. Federal Reserve Chairman Bernanke told Congress that higher energy prices could sap consumer spending which may weaken the U.S. economy. Investors are also concerned with China's manufacturing sector which contracted in March for the fifth straight month. The same contraction occurred in Germany and France which increased worry of a recession in the Euro zone.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7 to 1% point origination fee.

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  About the author, Ed Ferrara

Individual news stories are based upon the opinions of the writer and does not reflect the opinion of Realty Times.