Starting January 27th, the FHA will reduce the annual mortgage insurance premium paid by most FHA borrowers from 0.85% to 0.6%! This means more borrowers will have a better chance of qualifying to purchase a home with FHA financing. “FHA mortgage products exists to serve an important mission: providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional lenders,” said NAR President William E. Brown.
Mortgage Insurance is not Homeowners Insurance
In case you didn’t know, homeowners insurance and mortgage insurance are not the same. Homeowners insurance offers protection against structural property damages and possessions, and liability against accidents in or on the property. Mortgage insurance compensates the lender or investor against losses that result from default of a mortgage loan by the borrower, and is automatically added onto mortgages when the borrower puts down less than 20% of the purchase price.
What Savings will the Mortgage Insurance Premium Rate Reduction Provide to FHA Borrowers?
According to HUD, FHA borrowers who buy a home this year will save an average of $500.00. The rate reduction may also be the benefiting factor for a responsible borrower who may be borderline with meeting the required debt-to-income ratio and may result in a lower monthly mortgage payment, especially with the increase in mortgage rates, which are still considerably low.
Did you know that you may be able to take advantage of the reduced mortgage insurance premium rates as a FHA first-time home buyer even if you previously owned a home?
- has not owned a primary home in the most recent 3 years from the date of purchase of a new or existing home;
- is a single parent who only owned a home during the course of marriage to their former spouse;
- is married but either spouse has not owned a primary home in the most recent 3 years from the date of purchase of a new or existing home.
If any of the above 3 scenarios match your situation, then you may qualify for a FHA loan.
So what does this mean?
Now is the time to purchase a home or position yourself to become a homeowner this year. You don’t have to have perfect credit, you just need to be creditworthy and meet the loan requirements. You don’t want to be house-poor; the goal should be to have a comfortable mortgage payment that, when combined with your other monthly expenses, will allow you to enjoy life and the benefits of homeownership, and still save money.
Who Should I Call for More Information?
Contact EXIT Realty Expanded Vision today at 480-290-1009 so we can help you get started on the road to homeownership. We know excellent lenders who will discuss your options with you and help you get on track. Then, we will help you find your new home!