{"id":10312,"date":"2017-01-09T09:40:31","date_gmt":"2017-01-09T15:40:31","guid":{"rendered":"https:\/\/therealdaily.com\/?p=10312"},"modified":"2017-01-09T09:41:09","modified_gmt":"2017-01-09T15:41:09","slug":"fha-lowered-costs","status":"publish","type":"post","link":"https:\/\/theamericangenius.com\/housing\/homeownership\/fha-lowered-costs\/","title":{"rendered":"How the FHA just lowered costs for homebuyers in 2017"},"content":{"rendered":"

Lowered costs this year<\/h2>\n

The Federal Housing Administration (FHA) announced today a cut to annual premiums for mortgage insurance (MIP) from 0.85 percent to 0.60 percent, a move which many anticipated but waited with held breath\u00a0just in case.<\/p>\n

Read also: FHA’s annual report spells hope for housing affordability<\/a><\/strong><\/div>\n

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\nWhen a homeowner is part of the FHA mortgage program, they pay MIP at closing (currently a 1.75 percent fee) and then in 12 monthly installments annually, so this reduction will make a wide impact.<\/p>\n

The National Association of Realtors says this reduction “breathes new life into the program.”<\/p><\/blockquote>\n

Putting homeownership\u00a0back within reach<\/h2>\n

\u201cFHA mortgage products exist to serve an important mission: providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional lenders,\u201d said NAR President William E. Brown. \u201cThe high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time- and lower-income borrowers. Now, we have a real opportunity to get back on track.\u201d<\/p>\n

NAR notes that post-recession, the FHA had increased MIP from\u00a055 basis points to 90 basis points, then to a full 1.35 percent by April 2013. The increases reflected concerns over credit risk and the need to strengthen FHA’s Mutual Mortgage Insurance Fund (MMIF).<\/p>\n

Research by NAR indicated at the time that the 80 basis point increase over that period priced somewhere between 1.45 million and 1.65 million renters out of the market.<\/p><\/blockquote>\n

In a statement from NAR, the trade group noted that since then,\u00a0“the MMIF has shown continued good health<\/a>, including achieving a much-watched capital reserve ratio of over 2 percent for two years in a row. In light of that strength, NAR applauded<\/a> FHA\u2019s move in January 2015 to reduce premiums to 85 basis points, and since then has advocated for a further reduction<\/a>.”<\/p>\n

It’s just math<\/h2>\n

NAR notes that FHA mortgages are important for low- and moderate-income buyers in particular because a lower down payment is required than with many conventional mortgage options. Lower credit scores have a better chance of favorable treatment with an FHA loan compared to a conventional product.<\/p>\n

Brown notes that most importantly, this means the\u00a0FHA will represent a viable option for more borrowers.<\/p><\/blockquote>\n

\u201cThis is a question of simple math,\u201d Brown said. \u201cEvery time we cut the cost of mortgage insurance it means more borrowers meet the debt-to-income ratio required to purchase a home. It follows that dropping mortgage insurance premiums today will mean a whole lot more responsible borrowers are suddenly eligible to purchase a home through FHA. That puts more money in the fund to protect taxpayers, and it puts more families in homes so they can live out the American dream.\u201d<\/p>\n

Brown\u00a0concluded, \u201cOur work continues, but we\u2019re encouraged by today\u2019s announcement.\u201d<\/p>\n

#MIPreduction<\/h3>\n","protected":false},"excerpt":{"rendered":"

(REAL ESTATE NEWS) The FHA just made a change that prices more homebuyers back into the market. NAR says, “Now, we have a real opportunity to get back on track.\u201d<\/p>\n","protected":false},"author":335811,"featured_media":9822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"wds_primary_category":0,"footnotes":"","jetpack_post_was_ever_published":false,"_links_to":"","_links_to_target":""},"categories":[602],"tags":[1374,334,1234],"class_list":["post-10312","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-homeownership","tag-mip","tag-mortgage","tag-real-estate-news"],"jetpack_featured_media_url":"https:\/\/theamericangenius.com\/housing\/wp-content\/uploads\/sites\/2\/2016\/11\/cash-money.jpg","jetpack_sharing_enabled":true,"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts\/10312","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/users\/335811"}],"replies":[{"embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/comments?post=10312"}],"version-history":[{"count":3,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts\/10312\/revisions"}],"predecessor-version":[{"id":10315,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts\/10312\/revisions\/10315"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/media\/9822"}],"wp:attachment":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/media?parent=10312"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/categories?post=10312"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/tags?post=10312"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}