President Obama recently announced that the Federal Housing Administration (FHA) will reduce annual mortgage insurance premiums (MIP) by 0.5 percentage points, as reported in Zillow. This is done in an effort to place homeownership within reach for more U.S. citizens.
To put this in perspective, a $175,000 home loan with less than 5% down, this newer MIP reduction will equate to a savings of $818 per year (or $3,932 over 5 years):
New FHA loans last the entire life of the loan, whether or not you have more than 20% equity in your home.
The changes will take annual MIP from 1.35% to 0.85% for loans with less than 5% down, and from 1.30% to 0.8% for loans with more than 5% down.
The White House anticipates this shift in premiums will help more than 800,000 homeowners save on their mortgage costs, while enabling up to 250,000 new home buyers to purchase a home.
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