We just found out that anyone that uses an FHA mortgage, which is a government insured mortgage, now will pay less for mortgage insurance!
The housing market has improved across the nation recently and has become very stable. This means there have been fewer defaults by buyers and fewer FHA foreclosures.
Because of this, the lower likelihood of defaults by buyers, HUD has announced today that the annual mortgage insurance premium is being reduced from .80 to .55 for loans on homes valued $625,000 and less with 95% loan to value.
Here's the update from HUD:
FHA Mortgage Insurance Decrease 2017
An FHA mortgage allows first-time buyers, or any buyer who wants to use it, to put down only 3.5% downpayment when purchasing a home and the government "insures" the balance of what would otherwise be a 20% downpayment. There are several benefits of an FHA mortgage including the low downpayment, lower credit score requirement, and no income limit. Many other mortgages that first-time buyers use have an income limit and are geared towards lower income buyers.
With an FHA mortgage, each month you will pay an insurance premium, and your'll have an upfront fee that can be rolled into the loan, but many people still prefer this loan because of the lower downpayment requirement. It's not easy to get a chunk of cash out of your house if you put all your money into it for a downpayment so if you need money for other things, it may cost you a much higher interest rate.
This will save the typical buyer about $500 a year in payments. You may want to check in with a local mortgage lender to see what that could mean for you if you decide to buy a home in 2017!
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