FHA to lower cost of mortgage insurance

In an effort to make owning a home more affordable, the Federal Housing Administration will dramatically cut the costs associated with the mortgages it backs.

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 statement Thursday.

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.

“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,” the White House said.

The White House estimates that the lower premiums will enable up to 250,000 new buyers to purchase a home.

In the wake of the financial meltdown and ensuing foreclosure crisis, FHA raised its mortgage insurance premiums to shore up its finances. But now home values are on the rise, the jobs picture is improving and foreclosures have fallen to their lowest level since 2006.

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.

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.

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About thenoelteam

As a Broker with RE/MAX Alliance, I work energetically for my clients whether they are a buyer or seller. I help you achieve your goal of owning a home or getting the best price for your home in the shortest time possible. After graduating from UCLA with a degree in communications and finance, I was licensed in 1977 and since then I have sold over 3600 properties amounting to over $1 billion in sales. I currently rank in the top 10 in home sales for Colorado. I offer the same quality of service and superior communication to all clients, ranging from starter homes to multi-million dollar estates, commercial and income properties, relocations and foreclosures My goal is to provide you with the best representation possible whether you are buying or selling. Over the years, one of the things that I've discovered is that there is a difference in the way individual Realtors do business. For me, I have always felt that honesty and personal integrity are the foundations upon which a successful business and career are built and sustained. I have an extensive background and knowledge base in real estate, including financing, which has enabled me to provide outstanding, quality advice and service not found with many agents today. My commitment to communication creates a positive relationship between my client and myself that results in a successful property sale or purchase. My passion for real estate, commitment to my clients and personal integrity has helped me to achieve success placing me in the top 1% of all brokers in nationwide. In my career, I have earned a number of awards and received considerable recognition for my success but the most significant recognition comes from the fact that over 75% of my business comes from past clients. My success is a true measure of my client satisfaction.
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