If you are just starting out in real estate, if it’s time to buy your first home, or the first home you have been able to purchase since 2008, then you may like this news. FHA is a government program which guarantees your loan up to a limit of 80% of the purchase price of the home. because FHA guidelines allow purchasers to put as little as 3% of the purchase price as a down payment, something has to cover the difference between the mortgage and the loan amount. That’s where Mortgage Insurance comes in to play.
The Dollar amount between the purchase price and the mortgage amount is covered by this private Insurance that is called MIP. Depending upon how the markets are doing, and how much the purchase price and down payments are, MIP( mortgage Insurance Premiums) can be lower or higher. Recently, because of all the foreclosures that happened, MIP had been relatively high. Over the past few years though, a the market recovered, the premiums have been slowly coming down. This week FHA announced that
“When the Federal Housing Administration announced late last year that its flagship fund, the Mutual Mortgage Insurance Fund, grew for the fourth straight year, it led to many questions about whether the FHA should cut its mortgage insurance premiums again.
While, Ed Golding, the Department of Housing and Urban Development’s principal deputy assistant secretary for housing, said at the time that the FHA is not considering cutting its mortgage insurance premiums, that’s not the case anymore.
Golding said that the results of the FHA’s portfolio “clearly show that there is room to return pricing to a level that reflects the risk in the program,” but said that agency considers other items when determining whether to cut premiums, including the outlook for the economy, the budget implications of a cut, and determining when is the right timing for a cut.
While the timing apparently wasn’t right in November, the timing is right now, as the FHA announced Monday that it is cutting its annual mortgage insurance premiums for the second time in two years.
In 2015, the MMI Fund reached its Congressionally mandated threshold of 2% ahead of schedule, a feat that surprised many observers considering that it came after the Obama administration announced a 50 basis point cut in annual mortgage insurance premium prices in January 2015.
The MMI Funds’ subsequent performance drove speculation that the FHA may cut premiums again in 2016 or remove the life-of-the-loan policy. That speculation grew when the FHA announced in November that its flagship fund grew in fiscal 2016, further surpassing its Congressionally mandated threshold of 2% and reaching 2.32%.
And Monday, those who speculated the FHA would cut its premiums again were proven right.
According to the FHA, it will cut the annual mortgage insurance premiums most borrowers will pay by one-quarter of a percentage point, or 25 basis points.
The FHA said that it projects that its new premium rates will save new FHA-insured an average of $500 in 2017 alone.
According to the FHA, the cut applies to new mortgages with a closing or disbursement date on or after Jan. 27, 2017.
In a statement, HUD Secretary Julián Castro said that the cut aligns the FHA’s policies with “today’s risk environment” and “comes at the right time” for borrowers who now have to deal with a rising mortgage interest rate environment.”
FHA Loans have more flexibility that some conventional loans. If you have had a foreclosure or other credit problems in the past, but you have re-established new credit and paid everything on time for at least 4 years, then you can obtain an FHA backed loan. conventional loans will require that your credit has been clean for at least 7 years, and for some of you that got hit hard during the economic downturn, that makes it difficult to re-establish yourselves.
There are ways to buy a home, you just have to be willing to put in the work, keep your spending under control, and give me a call. I will help you find a great home that your can afford.
Your Jupiter area realtor
You can read the remainder of this article by Ben Lane @http://www.housingwire.com/articles/38902-fha-cuts-mortgage-insurance-premiums-again?eid=337112505&bid=1629955