01/12/2017
FHA TO REDUCE ANNUAL INSURANCE PREMIUMS IN 2017
Now purchasing a property, just became a lot better sometime the smallest things can make the difference in purchasing just any home to purchasing your dream home.
On January 9, 2017, the Department of Housing and Urban Development (HUD) announced that it would reduce the annual mortgage insurance premium for most FHA loans in 2017. As HUD officials stated, this is a modest reduction that “expands credit access and reflects improved economic health of FHA.”
Federal Housing Administration officials will reduce the annual mortgage insurance premium for FHA loans by a quarter of a percent. The lower MIP rate will apply to most borrowers’ specialty, first time buyers who use the FHA program to buy a home in 2017, and will save them an average of $500 per year. The lower insurance premium takes effect on January 27, 2017.
This is a question of simple math, Every time FHA cut the cost of mortgage insurance it means more borrowers meet the debt-to-income ratio required to purchase a home.”
When borrowers take out an FHA loan, they can borrow up to 96.5% of the home's purchase price. For any loan in which the borrower puts up less than 20% of the money, the borrower is required to purchase mortgage insurance.
Since the government is guaranteeing the loan, the mortgage insurance reimburses the government in the event of default. The mortgage insurance premium is added onto the borrower's monthly payment.
Saving $500 a year
That money goes into FHA's Mutual Mortgage Insurance Fund (MMIF), which has grown in value by $44 billion since 2012. U.S. Housing and Urban Development Secretary Julián Castro says that increase means this type mortgage insurance premium will go down by $500 in 2017, lowering the typical FHA house payment by more than $41 a month.
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Good news for home buyers: HUD announced today that it will lower the annual FHA mortgage insurance premium (MIP) for 2017 by a quarter of a percent.
