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FHA insurance premiums could triplePosted On Mon, June 14, 2010
Many consumers are already paying high home insurance premiums thanks to a number of factors, but those payments might increase even more sharply thanks to a new measure from Congress.
Late last week, the House approved an increase in annual premiums paid by those who insure their homes through the Federal Housing Administration. According to a UPI report, those increases would nearly triple the current rates. The Senate has yet to vote on the bill.
The report said that the annual premium increase would go from 0.55 percent of the home's value to 1.50 percent, but would also allow the FHA to reduce the amount of money buyers will require at closing. The Administration insures about one-third of all mortgages, including half of those for first-time home buyers.
While the new bill would allow for buyers to put less money down, there will also be stricter standards for credit scores. Borrowers with a score below 580 will have to put down 10 percent of the home's value to mitigate risk.
An Reuters report said the law requires the FHA to have enough reserves to back 2 percent of the mortgages it ensures, but currently has just 0.53 percent.
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