FHA Lowering Mortgage Insurance Premiums


Becoming a first-time homeowner is an important goal for many individuals and families. In a move that could lower the cost of achieving this goal for many first-time homebuyers, the United States government has recently announced that the Federal Housing Administration (FHA) is going to lower its annual insurance premiums.

FHA mortgage insurance is created in order to protect lenders in the event that a borrower defaults on a loan. The new FHA annual insurance premiums will be 0.85 percent, down from a previous 1.35 percent. This move could improve the housing marking by expanding lending prospects for creditworthy borrowers who seek an FHA loan.”Too many creditworthy families who can afford — and want to purchase — a home are shut out of homeownership opportunities due to today’s tight lending market,” said the White House.

mortgageinterestEstimates about the expected savings that this reduction will create ranges from approximately $80 a month to around $900 a year for the average first-time homebuyer. This dramatic reduction could have a huge impact on the pool of prospective homebuyers who are able to make their dream a reality.

“The White House estimates that the lower premiums will enable up to 250,000 new buyers to purchase a home,” states Chris Isidore from CNN Money.

Isidore also believes that this move by the government is an important one to prospective homebuyers who have low income or that can be considered higher risk borrowers.

 “As private lenders tightened their lending standards, FHA-backed loans became the only mortgages available to many of those buyers, given their tiny down-payment requirements and easier credit-score hurdles,” states Isidore.

These savings have the potential to make home ownership more affordable across the board, not just for first-time homebuyers. It will also be possible for existing homeowners to achieve savings by refinancing into an FHA loan, and the savings for these refinancers is expected to be roughly the same as for people taking out their first mortgage.

“This action will make home ownership more affordable for over two million Americans in the next three years,” said Julián Castro, U.S. Department of Housing and Urban Development Secretary. “Since 2009, the Obama administration has taken bold steps to reduce risks in the mortgage market and to protect consumers. These efforts have made it possible to take this prudent measure while also ensuring FHA remains on a positive financial trajectory. By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures.”

Homeownership is closer than you think. Contact us today to see all the options we have available so you can get the house of your dreams.

 

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