With the announcement by the Department of Housing and Urban Development that the Federal Housing Administration (FHA) is set to reduce its rates, it’s an exciting time for many homeowners who are preparing to buy. If you’re shopping around for a home and are wondering how these changes to premiums may benefit you, here are some of the ins and outs of what this announcement means.
The Details On Lower Premiums
For homeowners who are taking out a mortgage that is insured by the government, the reduction in annual mortgage insurance premiums can be a great benefit associated with investing in a home. While this reduction will definitely help homeowners save money, it is not a significant enough amount to make a large difference in the overall cost of the home. However, it can be a more marked difference for those homeowners who are taking out a home loan for a larger amount.
How Big A Benefit?
While those who require a larger home loan can certainly see a little bit more savings by the end of the year, the amount saved for small-time borrowers may not be enough to stimulate home investment. According to Laurie Goodman of Urban Institute’s Housing Finance Policy Center, there are other things the FHA could offer that would be more beneficial to potential homeowners and would facilitate more investment in the housing sector. This reduction may be a benefit for those already set on buying, but it may not provide enough of an impetus for those who are on the fence.
Is It Time To Buy?
With mortgage rates set to rise and the benefit of the FHA’s reduction in rates, it’s an ideal time to buy for the homeowner with a solid credit history and a down payment. However, for those who are still considering their options and are struggling with credit issues, the FHA’s reduction may not be enough of a benefit to make it a worthwhile investment. Before making a decision, it’s important to sit down and determine if investing in a home is the right financial decision for you.
The reduction of mortgage insurance premiums by the FHA will result in money savings for the homebuyer, but it’s important to determine beforehand whether this will provide a significant enough benefit to invest. If you’re currently on the market for a home, contact your trusted mortgage professionals for more information.