January 9, 2015
Some homeowners who purchased homes with FHA loans could save as much as $900 a year thanks to a reduction in the FHA mortgage insurance premium announced by the FHA and HUD.
An FHA/HUD press release (HUDNo. 15-001) announced the change, which could take effect as early as the end of the month. According to the release, “As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration (FHA) will reduce the annual premiums new borrowers will pay by half of a percent.”
Half a percent may not sound like a lot to some, but according to the FHA official site, that half-percent reduction “is projected to save more than two million FHA homeowners an average of $900 annually and spur 250,000 new homebuyers to purchase their first home over the next three years.”
“This action will make homeownership more affordable for over two million Americans in the next three years,” said U.S. Department of Housing and Urban Development Secretary Julián Castro, who was quoted in the press release.
He added, “Since 2009, the Obama Administration has taken bold steps to reduce risks in the mortgage market and to protect consumers. These efforts have made it possible to take this prudent measure while also ensuring FHA remains on a positive financial trajectory. By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures.”
The half-percent reduction is expected to “significantly expand access to mortgage credit for these families and is expected to lower the cost of housing for the approximately 800,000 households who use FHA annually.”
The FHA hasn’t officially announced exactly when the new mortgage insurance premiums will take effect but a new Mortgagee Letter detailing that and other aspects of the change soon.
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Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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