It's a good sign for the housing market, particularly for low and moderate income home buyers.
Mortgage insurance premiums, a charge to home buyers who put down less than 20 percent to purchase a home with an FHA mortgage, will drop from .85 percent to .60 percent.
David H. Stevens, the president and CEO of the Mortgage Bankers Association, told the press that lower premiums will benefit consumers.
“Reducing the cost of FHA loans benefits borrowers, but other changes to reduce uncertainty for lenders would be required to truly invigorate the FHA program,” Stevens said in a statement. “MBA looks forward to continuing to work with all stakeholders, including the new Administration, to ensure the safety and soundness of the FHA program.”
The National Association of REALTORS® agreed, saying: “FHA mortgage products exist to serve an important mission: providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional lenders,” said NAR President William E. Brown. “The high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time and lower-income borrowers. Now, we have a real opportunity to get back on track.”
Read more at Chicago Agent Magazine here.