FHA LOWERS MORTGAGE INSURANCE PREMIUM
Have you heard the news? President Barack Obamarecently announced that the Federal Housing Administration (FHA) will lower its annual insurance premiums from 1.35 percent to 0.85 percent. This move by the government insurer of home loans is designed to bring more first-time homebuyers into the housing market. The White House also stated that the move will hopefully improve the housing market by expanding responsible lending to creditworthy borrowers.
"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. “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."
This strategic cut, which took effect as of January 26th, was a much anticipated move for many potential homebuyers and mortgage bankers alike. Since February is the start of the spring market the lowered FHA Mortgage Insurance Premiums (MIP) are estimated to have a definitive impact in the first-time homebuyer market.
The FHA's volume had soared at the beginning of the housing crash, making up for the lack of credit in the private market, however to rebuild its fund, it more than doubled its annual insurance premium and raised average credit scores. That made it harder for borrowers today toafford an FHA loan. Lowering the premium will hopefully bring volume back to the FHA as well as offer many qualified homebuyer opportunities they didn’t have before. In fact, for the typical FHA applicant, the reduction in premiums means a savings of about $80 on their monthly payment, according to CoreLogic's chief economist, Sam Khater.
For more information about the FHA’s lower mortgage insurance premium or questions about purchasing a home in the Tucson area, please contact the Simply Property Management-Paielli Realty, Inc. team.