With the housing marketing continually improving across the nation, you may have read in the recent news President Obama announcement that the Federal Housing Administration (FHA) is reducing its annual mortgage insurance premiums (MIP) for all new borrowers. If you weren’t aware, FHA annual mortgage premiums are paid monthly throughout the year in addition to principal, interest and insurance. The rates are dropping by half of a percent, changing from 1.35% to 0.85% for loans with less than 5% down and 1.30% to 0.80 percent for loans with more than 5% down.
According to the White House, it is estimated that more than two million FHA homeowners will save an average of $900 a year, as well as enable 250,000 new home buyers to purchase their first home. This reduction in annual mortgage premiums reflects the improvement in the economic health of FHA’s Mutual Mortgage Insurance Fund since when it had to raise it during the housing crisis several years ago to stabilize it.
FHA’s new lower mortgage premiums are scheduled to go into effect at the end of January. You can visit www.hud.gov for more information regarding FHA loans and requirements and for more information on the lowering of their MIPs.