FHA Lowers Mortgage Insurance Premiums!
Filed under: Mortgage News
The department of U.S. Housing and Urban Development (HUD) announced on Monday that they will reducing the premiums charged on FHA insured mortgages by a quarter of a percent (.25%).
HUD secretary Julian Castro stated that four years of growth and the buildup of sufficient reserves are allowing HUD to make this move.
This change will go into effect on loans with FHA case numbers issued after January 27, 2017.
Bill Provost
Franklin Loan Center
What does this mean for home owners?
First and foremost, this means a marked decrease in the monthly payments of FHA borrowers.
As an example, a borrower with a $350,000 loan amount would have previously paid a monthly mortgage insurance premium of $248. That monthly premium on the same loan after January 27, 2017 will be $175, resulting in an annual savings of $876.
HUD estimates that the average borrow will save approximately $500 per year (Source: CNBC).
The second impact this will have is on a buyer’s ability to qualify for a home loan. With overall payments (PITI) being slightly lower, borrowers will have an easier time qualifying. .25% may not seem like a major difference, but in many loan scenarios, it could be just enough to lower a borrower’s debt ratios into the accepted range.
PLEASE NOTE: This change will NOT affect existing FHA borrowers. The reduced insurance premium will only be applied to new loans after January 27, 2017.
If you have questions or require assistance, contact Bill Provost at Franklin Loan Center, (760) 282-4415 or email bill@homeloanpartner.com.
