According to the Boston Globe, Boston residents and homeowners nationwide who take out home loans backed by the Federal Housing Administration (FHA) will probably see hike in fees for mortgage payments. The House approved a bill that would give the FHA the ability to increase mortgage fees. The vote was an overwhelming 406-4 in favor of the measure.
The reason for the measure was to help with the agency's financial troubles. While the FHA does not offer loans, they do offer mortgage insurance in order to protect against defaults. The extra fees that homeowners must pay on their mortgages are due to the fact that buyers only have to put down payments of 3.5 percent.
While this only affects homeowners who have loans backed by the FHA, it does bring about questions for any homeowner in Massachusetts to ask their Boston real estate attorney with regards to mortgage insurance in general. Homeowners can get mortgage insurance through privately owned companies as well. The state of Massachusetts provides some answers about PMIs:
What Is Private Mortgage Insurance (PMI)?
It is a private insurance that ensures against the default of a mortgage. It protects the lender against loss if the borrower stops making payments.
Why Would Anyone Need A PMI?
When a homeowner buys a house with less than 20 percent of the down payment, studies have shown that he/she is more likely to default on that mortgage. Therefore, it makes it risky for lenders to have low down payment mortgages. Some lenders require a PMI because it makes the transaction less risky for them.
It is also useful for homeowners because it allows people to buy a home faster than they normally would have been able to because they need less money for the down payment. It allows some homeowners a wider range of homes because of the lower down payment. It also allows people to use their savings for other uses since they don't need a large down payment.
Whether or not you need mortgage insurance is something you should discuss with a Boston real estate lawyer.
For more general information, you can check out the Related Resources links.
Related Resources:
- Obama's Mortgage Program a Bust? (FindLaw's Boston Real Estate Law News Blog)
- How Do I Get Rid of My PMI (Private Mortgage Insurance)? (FindLaw)
- Call A Boston Real Estate Attorney (FindLaw)
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