The FHA could be saving home buyers an avg of $500 this year, which is good news for middle class Americans who are trying to build wealth in real estate. U.S. Housing and Urban Development Secretary Julián Castro said on Monday the Federal Housing Administration will reduce the annual premiums most borrowers will pay by a quarter of a percent.
What Does This Mean For Home Buyers ?
We spoke to one of our lenders, Mike Rolston to give us additional information. For more information on this change, please reference the table below from FHA’s Mortgagee Letter.
As the nation’s housing market continues to improve, FHA took a bold step into 2017. Announcing that they will reduce the annual premiums most borrowers will pay by a quarter of a percent. The move restores the annual premium close to its pre-housing-crisis level. And predicts that it will save new FHA-insured homeowners an average of $500 annually.
The 25-basis-points reduction in annual mortgage insurance premiums is effective for most new mortgages with a closing/disbursement* date on or after January 27, 2017. This guidance applies to all FHA Title II forward mortgage programs except for mortgages insured under National Housing Act section 247 (Hawaiian Homelands). Please note that this does not change up-front mortgage insurance premiums.
National Association of Realtors
This is good news for those looking to take out a mortgage in 2017. This will help with some mortgage rate increases since the election in November. The NAR ( National Association of Realtors) have said this is a good “fresh start”. But also insist to ask the the FHA to remove the life long insurance requirement.
NAR is calling on FHA to take even more steps to help home buyers. Including eliminating FHA’s “life of loan” mortgage insurance requirement, which forces borrowers to maintain mortgage insurance regardless of their equity position. Borrowers with traditional mortgage insurance can typically extinguish their mortgage insurance once they reach 20 percent equity in the property.
This would be great for consumers, especially those who are purchasing homes with smaller down payments. Which is very possible in today’s market and first-time buyer programs.