Lower FHA Insurance Premiums to Take Effect by the End of January

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After President Barack Obama announced a plan for the reduction of the mortgage insurance premiums for FHA loans, the Federal Housing Administration confirmed that the new premiums will be applied from January 26th 2015 onwards.
Currently, the annual premium rate on the mandatory mortgage insurance for a 30-year fixed-rate FHA mortgage loan with down payment which is lower than 5% is 1.35% of the total loan balance. From January 26th, it will be 0.85%.

The annual insurance rate on the same type of loan with down payment which is higher than 5% will decline from 1.30% to 0.80%. The annual insurance premium rates on 15-year fixed-rate mortgage loans will not undergo any changes.

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According to the official statement from the White House, the reduction in the FHA mortgage insurance premiums by 50 basis points will make mortgage loans more affordable and accessible to families that are creditworthy. The President’s Administration has estimated that the cut in the insurance premium will generate annual savings of $900 in the form of lower mortgage payments for the typical first-time home buyer. Existing homeowners who will use an FHA loan to refinance can expect similar mortgage payment reductions.

The statement reads that the changes will support the recovery of U.S. the housing market. According to estimates made by the White House, as many as 250,000 new home buyers will be able to purchase a home as a result of the reduction in the mortgage insurance premiums.

The FHA has announced that borrowers, who have made an application for an FHA home purchase loan or for refinance and who have not closed yet, will temporarily have the opportunity to cancel their application. Borrowers in this situation will be able to reapply for a mortgage loan after January 26th to take advantage of the new lower annual mortgage insurance premiums.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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