Hey there, future homeowners! Have you heard the news? The Biden administration just released a plan announcing some exciting changes to FHA mortgage insurance rates that could make buying and owning a home more affordable for hundreds of thousands of people! So, what’s the scoop?
The plan is all about cutting mortgage insurance costs by 30% for buyers who take out Federal Housing Administration-backed mortgage loans, from 0.85% to 0.55%. That’s right, you read that correctly! The reduction could save 850,000 homebuyers and homeowners who have FHA loans an average of $800 this year. And when does this awesome discount take effect? Mark your calendars for March 20th, 2023!
What is mortgage insurance?
Now, you may be wondering, what exactly is mortgage insurance and why should I care? Well, let me break it down for you. Mortgage insurance is an additional expense that homebuyers have to pay if they put down less than 20% when buying a property. And while the mortgage insurance attached to some home loans goes away after homeowners pay off a certain amount of their loan balance, the mortgage insurance tied to those FHA loans remains until the entire mortgage is paid off, unless the buyer put down at least 10% at the time of purchase.
But don’t worry, there’s always a solution! Homeowners can always refinance out of an FHA mortgage loan. And you may be wondering, what are FHA mortgages anyway? Well, they’re intended for low- and middle-income homebuyers, as they require lower down payments and allow for more flexibility on credit requirements than conventional mortgage loans.
How does this help?
The bottom line is that this FHA mortgage insurance announcement comes at a critical time, as housing prices remain unaffordable in many parts of the U.S. By the end of last year, the median home price had reached $467,700, which can make it challenging for financially vulnerable buyers to enter the market. Vice President Kamala Harris put it best when she said, “A home represents financial security, the opportunity to build wealth and equity that can help put your child through college, afford retirement, create intergenerational wealth within your family. That’s what all of this represents. It is so much bigger than a piece of property.”
So there you have it, folks! The latest news in the world of real estate is a great one for many homeowners or future homeowners. As always, if you have any questions or are interested in exploring your options, don’t hesitate to reach out!. We’re here to help you make your homeownership dreams a reality!