FHA taking criticism for extra interest payments

Some of those with FHA mortgages are being forced to make interest payments even after their loan is closed.The Federal Housing Administration is taking criticism from some lawmakers for charging some homeowners for interest costs after they sell or refinance their homes.FHA loans are one of the major sources of financing for first-time buyers looking at Houston homes. But when they sell or refinance that FHA loan, the agency requires they pay interest for the entire month, even if the transaction takes places during the first few days of the month.Those interest charges can add up to hundreds of dollars – a major concerns for those who may be trying to furnish a completely new home. The FHA is the only major source of financing to have such an arrangement. Maryland Senator Benjamin Cardin has introduced legislation that would ban the practice.”This is an issue of fairness,” said Senator Cardin, a member of the Senate Finance Committee. “Homeowners should not have to pay interest on loans that have been fully repaid.”The Washington Post reports the reason for the extra charge is that the agency promises investors they will be paid for the full month, so those costs are passed on. However, there is a trade-off. Because of that deal, the FHA is also able to give borrowers a discount on their interest rates.Courtesy of 2M Realty News?

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