FHA Borrowers May See a Reduction in Their Mortgage Payment
Federal Housing Administration to lower mortgage insurance rates.
FHA borrowers are in for some good news. The Federal agency plans to drop mortgage insurance rates for borrowers and homeowners who obtained a home mortgage loan through the Federal Housing Administration.
The loan program helps those with lower income or who may not otherwise qualify for a conventional home mortgage. Many borrowers are allowed the opportunity to get into home ownership with little or no money down.
Of course, because so little of the homeowner’s own money is at stake, FHA mortgagees are required to obtain Primary Mortgage Insurance (PMI) as a safety net in the case of a default. This amount is added to their monthly mortgage payment along with taxes and homeowner insurance.
Once the value of the property exceeds a certain percentage of the mortgage, the borrower may apply to have the PMI removed from their monthly payment.
The rate reduction is scheduled to begin January 27th, and could save the average FHA homeowner up to $500 per year.
UPDATE JANUARY 20, 2017: On this date, the U.S. Department of Housing and Urban Development (HUD) reversed its decision to lower FHA mortgage insurance rates, suspending the rate drop indefinitely.
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