A recent bill now offers borrowers who undergo counseling before buying a home a discount on their upfront mortgage insurance. Just this last week, the House of Representatives passed a bill that cut the cost of upfront mortgage insurance for first-time homebuyers using mortgages backed by FHA. It says that first-time homebuyers who complete a housing counseling program can get a 25 basis point discount or .25% on their upfront mortgage insurance for an FHA loan.
The housing counseling program offers first-time homebuyers information about sustaining homeownership and keeping their mortgage active. It's a great incentive for first-time homebuyers unfamiliar with homeownership process as well as for those in underserved communities.
The Mortgage Bankers Association is in support of the bill but also is concerned that any adjustments to insurance premiums should be made carefully at the Housing for Urban Development's discretion so that FHA's insurance fund is not negatively impacted. "The MBA also recommends that any legislative change to the FHA's premium structure maintain HUD's discretion to set insurance premiums that are consistent with actuarial evidence accepted by HUD." [Housing Wire]
It's been proven that enhanced financial literacy has a positive effect on homeownership and those maintaining their mortgage and homeownership status. It's important for all homeowners especially first-time homeowners to understand the basic principles of saving, investing and planning for the future. Those that prepurchase housing counseling are more well-equipped with the much-needed financial skills and tools to make financial decisions that benefit their families and surrounding neighborhoods. The bill will now move on to the Senate for a vote before final presidential approval.
Representatives who presented the bill urge the Senate to support this common-sense initiative that incentivizes homebuyers to take greater control of their financial future.