FHA To Reduce Mortgage Insurance Premiums From 1.35% to .85% Roger Odoardi Future first time homebuyers have a reason to be hopeful in the New Year thanks to a recent announcement from the Federal Housing Administration (FHA) that it would lower annual insurance premiums from 1.35 percent to 0.85 percent. The move, which was announced by President Barack Obama and Secretary of Housing and Urban Development Julián Castro, means first time homebuyers may have an easier time accessing home mortgage loans with affordable terms. The President’s new proposal to reduce the fees associated with buying a home is expected to help first-time homebuyers save an average of $900 on their annual mortgage payment. This reduction in annual insurance premiums is expected to help over 2 million Americans over the next three years. The FHA estimates the savings will allow another 250,000 first time homebuyers to enter the housing market. “Hundreds of thousands of new buyers is going to mean a healthier housing market for everyone,” Obama said, according to a report in The New York Times. “We do want to make sure that the housing market is strong and that responsible homeowners can get a good deal.” First time homebuyers may not be the only ones who will stand to benefit from the decrease in the insurance premiums. Current homeowners can take advantage of the new rates, but will have to refinance their current mortgages. New borrowers get the new rate automatically. FHA loans are predominantly used by first time homebuyers who don’t have the cash on hand for larger down payments. Mortgage insurance, which is required on all FHA-backed loans that require as little as 3.5% of a down payment from borrowers, is meant to protect lenders in case of default by allowing them to recoup some of their losses. The U.S. Dept. of Housing and Urban Development was forced to increase mortgage insurance premiums for borrowers with loans insured by the Federal Housing Administration in the wake of the housing crash. Blue Water Mortgage Corporation prides itself on staying up to date on all the latest news happening in the housing market relative to home mortgage loans and refinancing opportunities. Our list of products and programs feature something for everyone—whether you’re a seasoned homeowner or first time homebuyer. Contact us today! Roger Odoardi Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.
