In my continuing effort to keep you up to date on the changes in the mortgage industry, I thought the announcement of an increase in FHA's annual mortgage insurance premium would be a timely topic. This change will take effect in April of this year, which is just around the corner.

According to HUD, the reason behind this increase is to strengthen FHA’s Mutual Mortgage Insurance Fund. This will help ensure the continuation of FHA lending. Without FHA options, fewer people would be able to purchase a home.

Key to this increase is that it only affects the FHA monthly premiums; the upfront percentage remains the same.

This table shows how the rate increase will affect a mortgage payment:

(source: Zillow.com)

The saying "timing is everything" is quite appropriate. As you can see by this table, the monthly payment for a newly purchased $400,000 home will increase by over $80. Not quite in the market for a home in that price range? The $100,000 homes will see an increase in monthly payments of more than $20; that's an extra $240 a year!

To determine what's type of mortgage is best for you, contact your trusted mortgage broker. Knowing all the facts and options available to you is the best way to approach this buying decision!