FHA reduces annual insurance premiums

As the nation’s housing market continues to improve, the Federal Housing Administration (FHA) recently moved to reduce the annual premiums new borrowers will pay by half of a percent.

While that may not sound like a lot, the impact and savings are considerable: More than two million FHA homeowners are projected to save an average of $900 each year. Meanwhile, the reduction could spur 250,000 new homebuyers to purchase their first home in the next three years.

What does this mean for your clients? The impact of lower premiums will not only result in lower annual housing costs for those who use FHA, it will also significantly expand qualified customers' access to mortgage credit.

"By bringing our premiums down, we're helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures," said U.S. Department of Housing and Urban Development Secretary Julián Castro.

Jason R HardinSr. Mortgage Loan Officer
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Lower FHA premiums to fuel home buying in 2015

Lower FHA premiums to fuel home buying in 2015: In a move designed to bring more first-time homebuyers into the housing market, the Federal Housing Administration (FHA), the government insurer of home loans, will lower its annual insurance premiums from 1.35 percent to 0.85 percent. Mortgage bankers praised the decision. "It couldn't come at a better time," said David Stevens, CEO of the Mortgage Bankers Association. "February is the beginning of the spring market. I think it will have a definitive impact particularly in the first-time homebuyer market." For the typical FHA applicant, the reduction in premiums means a savings of about $80 on their monthly payment, according to CoreLogic's chief economist, Sam Khater. The FHA had been the only low down payment product available, with a minimum 3.5 percent down, but recently Fannie Mae and Freddie Mac announced a new 3 percent down payment product that would require private mortgage insurance. The product would compete directly with the FHA and could have offered some borrowers a cheaper option if they had a good credit score. But many applicants that would qualify under FHA's credit and debt-to-income guidelines would not have been approved for the new Fannie and Freddie programs, so this move by FHA will add more purchasers into 2015. provided by: Dave Budzinski NMLS#: Phone: 314-862-0123 Email: everyonebigbend@mimutual.com