FHA will cut its mortgage insurance premiums to 0.85 percent, a 0.5 percentage point reduction (down from 1.35%)
President Obama was expected to make the announcement on Thursday in a scheduled speech on the housing market, but the White House made it official following initial media reports.
FHA loans had seen significantly increased costs for PMI (mortgage insurance) after the housing bust. The increased cost seriously hampered housing, keeping many out of the housing market. The reduction in costs should help creditworthy first time homebuyers re-enter the housing market.
This, combined with the recent announcement that 3% down payment conventional loans (Fannie Mae and Freddie Mac) are back, should really help the housing market.
Full details to follow as they come out, but this is great news that I wanted to get out ASAP.
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Joe Metzler is a Senior Mortgage Loan Officer for Minnesota based Mortgages Unlimited. He was named the 2014 Minnesota Loan Officer of the Year, and provides Home Mortgage Loans in MN, WI, and SD. He can be reached at (651) 552-3681
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