FHA has announced that it will lower its annual premium on the loans it insures from 1.35% to .85%. for loans with less than 5% down and for loans with more than 5% down, Mortgage Insurance Premium is lowered from 1.3% to .8%. With this new rule, the first-time home buyers can save about $900 a year on their mortgage payments. Same savings will be realized by existing home owners who refinanced into an FHA loan. That is significant savings over the life of the loan.
The annual Mortgage Insurance Premium is paid on top of principal, interest and insurance every month until the end of the loan.
According to the White House, the lowered premiums will help more than 800,000 home owners save on their monthly mortgage costs and enable up to 250,000 new home buyers to purchase a home. (Source: www.zillow.blog)
| Annual Savings After the Reduction in FHA Mortgage Insurance Premiums on a $175k 30-yr. Fixed Home Loan | ||
| Year | 3.5% Down | 5% Down |
| 1 Year | $818 | $805 |
| 5 Years | $3,932 | $3,863 |
| 10 Years | $7,421 | $7,276 |
| 20 Years | $12,669 | $12,375 |
| 30 Years | $14,709 | $14,338 |
Source: www.zillow.com
If you have any questions with the new FHA rule, do not hesitate to contact me.
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