In an effort to help potential homebuyers and the U.S. economy, President Obama announced yesterday that the Federal Housing Administration (FHA) will lower its annual mortgage insurance (MI) premiums significantly from 1.35% to 0.85%.
The White House estimates this will save $900 a year for new borrowers and said this is part of the President’s plan “to expand responsible lending to creditworthy borrowers.” However, the upfront mortgage insurance premium (MIP) of 1.75% will remain in place.
FHA requires a low 3.5% down payment, and FHA Mortgage insurance is a policy that protects lenders against losses that result from defaults on home loans.
“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.”
Many mortgage bankers such as myself are very excited about FHA making the necessary changes to continue to service the first time home buyers & underserved market.
This new program has not yet been released, and it hasn’t been determined if existing FHA mortgage holders will receive the new discounted mortgage insurance.
If you would like some more information about FHA home loans, or to get on my mailing list to receive updates when this is released and or on any other hot new mortgage programs, please e-mail me with the subject line “New Mortgage Programs” and I would be happy to assist you in any way I can. My e-mail is Erik@LoansReduced.com and you can also call me anytime at 800-779-4547.