For folks looking to purchase or refinance a home with the FHA Loan, the Federal Housing Administration has just announced a reduction to their private mortgage insurance premiums by 30 basis points. This is a step in the right direction to help drive home ownership. Here is what this means for your bottom line…
Presently on an FHA loan, the annual premium is 0.85%. So if you have a loan amount of say $300k the monthly PMI is present at $212 per month.
On March 20th, these changes get reduced by 2.55% earmarking a 30-basis point reduction in the annual paid mortgage insurance premium.
So using our example for $300k the new annual premium will be $137/month.
In this example, it lowers the payments for a borrower to $75 a month. Does this help? Absolutely, does and it helps drive homeownership for families looking to purchase homes in America today. However, this same goal could be accomplished by paying off a credit card that has a $75 per month payment on it or more for the same benefit than waiting for this change to potentially take place. However, that being said this does still provide a net tangible benefit to the borrower. A more opportunistic approach that could be beneficial to home loan borrowers going forward would be to look at maintaining a good credit score to the best of their ability, keeping their debts low, and best preparing themselves personally and financially for buying a home. This change does help people who are otherwise supportive of getting prequalified to buy a home.
If you are looking to buy get pre-qualified for a home loan, start by getting a free rate quote today.
