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Who’s Afraid of the FHA?
January 12, 2017 /At the beginning of the week, the Federal Housing Administration announced it will decrease its annual mortgage insurance premiums by .25% annually or from .85% to .6% per year. This measure will go into effect for new mortgages closing or starting disbursement on or after January 27, 2017. This is the first reduction in insurance premiums since January 2015, when the FHA reduced premiums by 50 basis points. While this decrease might seem modest, experts estimate that it is likely to save consumers hundreds of dollars each year. For instance, with this reduction a homeowner with a $200,000, 30-year fixed rate mortgage can expect to save about $500 annually. Looking at the larger picture, it’s expected that the reduction in insurance premiums will in total save $5 million for about 1 million borrowers. The announcement arrived on the heels of the FHA’s fourth straight year of economic health. In fact, since 2012 the FHA has reportedly increased its assets by over $40 billion. With such successful economic growth, the FHA has determined that offering lower prices to borrowers is fiscally responsible. The FHA’s decision further cements its importance for prospective homeowners. Since the Great Recession, FHA loans have been vital…Read more
