FHA Finally Gives Us a Break!
The White House confirmed this past week that they have directed the Federal Housing Administration (FHA) to reduce the rate on annual mortgage insurance premiums from 1.35 to .85 per cent. To quote the National Mortgage Professional Magazine "the White House is billing this development as a major new step...to make mortgages more affordable and accessible for creditworthy families, and adding that homeowners who refinance into an FHA mortgage will see similar reductions to their mortgage payments".
To put this in simple terms, the annual premium is divided into 12 monthly payments, so it equates to a reduction in the monthly payment. For example, on a $100,000 mortgage, the monthly rate used to be $135, now it has dropped to $85. The average savings per family will be $900 per year, per the White House statement.
They also state that this will allow 250,000 more purchases to occur within the next 3 years.
How can it help you? The $50 per month savings per $100K alone will allow you to buy more of a house (about $10K more), other than simply giving you a cheaper payment.
And if you have an existing FHA mortgage, and your interest rate is higher than the current market rate of 4% on a 30 year term, refinancing could benefit you in two ways. Giving you a lower rate and a mortgage insurance premium reduction. Also you may be able to cut your term (number of years) and keep your payment the same. Every case is different, but you owe it to yourself to check it out! Call your loan officer Monday!
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Recent Comments
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Makes me want to check this out...gotta get work done on my website today as a first priority...then see if this could make any difference for me financially. Always looking for ways to control the outgo when working from a fixed income....until my website is up and running.
Thanks for the heads up!
hope it is of help to everyone trying to get on property market or current owners looking to reduce their time paying a mortgage
Yes katie, when I look to refinance someone, I hope to get them more than one benefit, such as cutting the time, or getting rid of mortgage insurance, or cutting the rate of mortgage insurance, or reducing the monthly payment on the house, or paying off other debt to reduce the total monthly outgo. I was just able to help a veteran cut his payment by $320 per month, that was a significant amount.
that is a significant amount bet he was really happy, it is not that easy getting mortgages in the UK
Good point, Red....I was using a loan amount of $100K as an example, whereas the G-men were using an average loan amount that was higher than that, by my ciphering would be $150K....but thanks for paying attention and keeping me honest!
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Informative article, Cheryl
It's always good to have the lastest news on mortgages!
Thank you, and keep up the good work. It's helpful.
Best regards,
Rozz