FHA lowers cost of mortgage insurance - Hamilton Mill
FHA lowers cost of mortgage insurance. In a continuing effort to allow more potential home buyers realize their dream of home ownership, the Federal Housing Administration has cut mortgage insurance premiums on the loans the "back".
The premiums for FHA mortgage insurance, which is designed to protect the agency in case a borrower defaults on a loan, will be cut from 1.35% of a loan's value to about 0.85%, the White House said in a recent statement. This is welcome news to Hamilton Mill subdivision homeowners who are attempting to sell their homes or those Hamilton Mill homes for sale that come on the market this spring.
As a result, a typical first-time homebuyer will save $900 a year on their mortgage payments. Existing homeowners who refinance into an FHA loan will see similar savings. According to the White House, "Too many creditworthy families who can afford -- and want to purchase a home are shut out of homeownership opportunities due to today's tight lending market". Even homes for sale in Hamilton Mill have been affected by the tightened credit market.
The reduction in FHA insurance, the White House estimates will enable up to 250,000 new buyers to purchase a home. This is another dramatic step to help both the housing market and economy continue to recover.
In the wake of the financial meltdown and ensuing foreclosure crisis, FHA raised its mortgage insurance premiums to shore up its finances. With the current state of the real estate market and now that home values are on the rise, and foreclosures have fallen to their lowest level since 2006. Hamilton Mill has seen a marked improvement in the number of homes in foreclosure status and the number of homes in a short sale position (home is worth less than what is owed) is near zero.
Last March, the FHA announced it would not need another bailout due to improving financial conditions. The White House said that even after lowering premiums, reserves in the fund are projected to grow by $7 billion to $10 billion annually.
As most know, the highly popular FHA loans have been an important lifeline for low-income and higher risk borrowers in the wake of the financial crisis. As private lenders tightened their lending standards, FHA-backed loans became the only mortgages available to many of those buyers, given their tiny down-payment requirements and easier credit-score hurdles.