The Federal Housing Administration recently announced changes to FHA mortgages originated after January 26th and the biggest news is the reduction in monthly private mortgage insurance from 1.35% annually to .85%.
“So, why is this big deal?”, is a fairly common question I received when this news was screamed from the rooftops last week. The reason lowering the PMI (Private Mortgage Insurance) rate is a big deal is because it allows potential homebuyers who were already leery of an FHA mortgage because of the high PMI rate can afford and are more willing to look into an FHA mortgage. The benefit of an FHA mortgage is that a homebuyer with very little money to put down on a house can put as little as 3.5% to purchase the home. For example, if you want to buy a $100,000 house, you can put as little as $3500 down. This opens the door to homeownership to many more people.
In addition to helping new homebuyers, current FHA mortgage holders can refinance to lower both their interest rate and PMI potentially saving them hundreds of dollars a month. They don’t even need an appraisal or to verify income to do this special refinance.
Could you benefit from this? Let’s find out!
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