Just this week, President Obama announced the Federal Housing Administration (FHA) will lower annual mortgage insurance premiums by 0.5 percentage points. Not only will this make homeownership more affordable and accessible, but lower premiums can save homebuyers a great deal over the life of their loan.
For instance, on a $175,000 loan with less than 5 percent down, the 0.5 percentage reduction will save a Cleveland area homebuyer $818 per year or $3,932 over five years.
Along with your monthly mortgage payment, principal, interest and insurance, FHA mortgage insurance premiums are paid in 12 monthly installments. A new FHA home loan will take on premiums for the life of the loan, despite the amount of equity you have in your Ohio home.
The change will bring down the current annual mortgage insurance premium from 1.35 percent to 0.85 percent for a home loan with less than 5 percent down. For loans with more than 5 percent down, the change will adjust the annual MIP from 1.30 percent to 0.8 percent.
As the White House announced this week, these lowered premiums will allow more than 800,000 homeowners to save on their monthly mortgage costs and allow for more homebuyers to break into the local real estate market— as many as 250,000 new homebuyers will be given the chance.
BOLD Real Estate Consultants