After several years of record high homeownership rates in the
U.S. (during the housing boom), current trends are now moving in
the opposite direction according to a recent USA Today article:
Millions of houses on the verge of foreclosure threaten to send
homeownership to its lowest level in 50 years, according to new
industry estimates.
Fresh projections say the rate could plummet to about 62% as
early as 2012 and almost certainly by the end of the decade.
Homeownership rates haven't been that low since they hit 61.9%
in 1960.
The share of households that own their homes has been sliding
since the housing bubble burst in 2006. The rate fell again in
the second quarter of this year to 66.9% -- the lowest since
1999 -- from a peak of 69.4% in 2004, the Census Bureau says.
The 30-year fixed mortgage rate fell to a new low of 4.54
percent this past week from 4.56 percent the prior week and an
average of 5.25 percent a year ago. The 15-year fixed loan rate
also hit a record low of 4 percent, down from 4.03 percent a
week earlier and 4.69 percent last year. The five-year
adjustable-rate mortgage averaged 3.76 percent, compared to 3.79
percent the previous week and 4.75 percent a year earlier; and
one-year ARMs averaged 3.64 percent, down from 3.7 percent and
4.80 percent, respectively.
[SOURCES: Wall Street Journal; Information, Inc.]
FHA Increases Monthly Mortgage Insurance
(August 9, 2010) Last week, Congress has passed H.R. 5981 and it's headed to the President's desk.
There are some major FHA changes associated with this bill that gives FHA the authority to raise the annual mortgage insurance premium that is supposed to bring in $300 million more on a monthly basis to FHA.
So how does this affect the borrower?? The good news is that they plan to decrease the upfront mortgage insurance to 1%, down from 2.25%. The bad news however, is that monthly cost for mortgage insurance is going up from a factor of .55 to .90 for a 30 year loan.
That probably doesn't sound like a lot to most people, so let's put that into real numbers.
Let's take a look at an example of a purchase price of $150,000:
For an FHA loan BEFORE September 7, 2010
Upfront Premium (2.25%) - $3,256.88
Monthly mortgage insurance - $65.87
For an FHA loan ON OR AFTER September 7, 2010
Upfront Premium (1.00%) -$1447.50
Monthly mortgage insurance - $107.78
As you can see, while the upfront cost goes down by $1809.38, the overall increase in payment is $41.97 / mo.