On his first day in office, the Trump administration announced it was suspending the FHA mortgage insurance premium (MIP) reductions that had been set to take effect this month. A reduction in the FHA’s annual mortgage insurance premium had been scheduled to take place at the end of the month. However, those cuts have now been suspended indefinitely.
How Does This Impact Home Buyers?
If you purchasing a home and planned to use an FHA-backed mortgage, it means you will be paying the same premium rate for required mortgage insurance that you would have since two years ago. For most home buyers getting an FHA government mortgage includes a one-time upfront insurance fee, plus you will pay 0.85% of your loan amount for premiums each year. The Obama administration had planned to drop that rate to 0.60%. In 2014, the rate was 1.35%, after several increases to build up FHA finances after the housing crash from years ago.
For most borrowers buying homes with down payments of less than 5 percent, the monthly mortgage insurance payments will remain $141.67 for a $200,000 loan. It would have fallen to $100 a month. So in short, this means the average FHA home buyer will pay about $500.00 extra per year.
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