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Atlanta FHA loans are just about to get a bit more expensive.  Well, truth be told, so are all FHA loans.

There is one definitive reason for the increase, and one speculative reason.

First, what we know for sure, and that is the Up Front Mortgage Insurance Premium (Up Front MIP) is going from 1.75% to 2.25% on April 2, 2010.  That is the fee that borrowers typically add on to their FHA 30 year fixed rate loan to cover part of the Mortgage Insurance – the up front part.  The rest is paid monthly as part of their mortgage payment.

That .75% increase may not sound like a lot…until you spell in out in real dollars.

Example: If you take out a $200,000, 30 year fixed FHA loan for your Cobb County home, then the increase in MIP will add another $1500 to your loan.  In my world, $1500 is a lot of money.

Want to avoid that extra 15 Benjamins?  Well, if you are just now negotiating on a property to purchase, then make sure your lender get an “FHA Case Number” for you before April 2, and, just like that, you save a bunch of money.  Nice!

Second, the speculative reason.  At the end of March the Fed will stop buying Mortgage Backed Securities, and my prediction is that mortgage rates will begin to rise as new buyers for those securities are sought.

Nothing the FHA Case # can help you with there; but again, if you are close to getting that contract negotiated, then let’s lock your interest rate…AND pull the Case number.  Then you will save money now and save money over time.

That’s my tip for the day.  Even more changes are proposed for Atlanta FHA loans, but none are definitive yet, so we can save that for another day.

UPDATE 3/24: The Up Front MIP raises to 2.25% from it’s current 1.75% for FHA case numbers issued on or after April 5, not April 2 as I wrote above.