On Thursday, January, 8th the Federal Housing Administration announced that it would reduce the annual mortgage insurance premium on FHA backed loans by 0.5 percent as of January 26, 2015.
The change will drop rates from 1.35 percent to 0.85 on loans with less than 5 percent down and from 1.30 percent to 0.80 percent on loans with more than 5 percent down. This reduction is expected to reduce a borrower’s annual mortgage payment by about $900 and incentivize about 250,000 new homebuyers to purchase their first home over the next three years.
Not only should the changes spur massive numbers of new homebuyers to make their first purchase, it should increase affordability for the countless Americans already using the FHA program. “This action will make homeownership more affordable for over two million Americans in the next three years,” stated U.S. Department of Housing and Urban Development Secretary Julián Castro.
In addition to Thursday’s announcement being great news for those of you interested in obtaining an FHA loan, it further reflects the improved economic viability of the FHA’s Mutual Mortgage Insurance Fund which has undergone a $6 billion improvement since 2013.
It’s a great time to buy!