Cost of Mortgage Easing In 2017
Good news for American home buying consumers. Especially those benefiting from Boulder FHA mortgages. Starting 1/27/17, the amount charged in annual mortgage insurance premiums is set to decrease.
Critical Update to this article. President Donald Trump’s first order of business: suspending this savings to the American home buyer. See LA Times article here. I’ll update you as I learn more.
The techno mumbo jumbo has the cost coming down 25 basis points. The bottom line s a move like this should save consumers on average $500 a year. That’s a lot of nights at the movies or dinner dates for two if you ask me! This move is apt to benefit over one million US households.
FHA Announces Annual Mortgage Insurance Premium Reduction!
Up Front FHA MIP Unchanged
There is no change to the upfront FHA insurance fee. This charge remains the same at 1.75%. Mortgages charge this up front insurance fee to offset the risk that a certain percentage of loans go into default. Boulder home buyers can avoid the MIP/PMI if you place twenty (20) percent or more down. Of course, you probably are not going FHA if you have a larger down payment. There is also no change to the amount of time MIP fees will be charged on FHA financing.
Reduced Short Sales and Foreclosures Nationwide
The FHA mortgage insurance policy change is a result of improved reserves on hand to meet potential claims. Quite simply, we are no longer in the recession. The foreclosure rate nationwide is down. Short sales are becoming more and more a thing of the past. The US Housing and Urban Development department now feels there sufficient reserves to meet future issues.
FHA Mortgage Attributes
Home buyers only need to bring 3.5% for the down payment. Pricing (the rate you will get) is tiered to your FICO credit score. There is a shorter seasoning period for consumers coming out of a bankruptcy, foreclosure or short sale. A non-occupant co-borrower is allowed. This is a great advantage to use in getting out of the expensive rental market and into your own home. And finally, there are no income limits with Boulder FHA transactions.
- LTV > 95%: 0.60% (from 0.85%)
- LTV ≤ 95%: 0.55% (from 0.80%)
Boulder FHA Example
Let’s face it, what’s good on average is going to be really beneficial in Boulder, where home prices happen to be higher. Consider an entry level property in Longmont or Lafayette, with only 3.5% down and a $300,000 loan. Under the outgoing system, the Mortgage insurance premium would be $212 month ($2,550 annually).
But now, Boulder FHA buyers are getting a 25% reduction in costs. In this same scenario, the annual MIP is only $1800. Or, just $150 per month. In this example a Boulder first time home buyer is going to save $744 annually.