Long Awaited Good News for Buyers
Recently we saw incredible inflation in home prices, bidding wars, no charge lease backs to sellers, inspection clauses waived, appraisal guarantees... and many buyers, especially first time home buyers or those with less than ideal credit scores, became deflated. Rising interest rates made matters seem even more hopeless for some.
On February 22, 2023, the FHA provided news that the annual mortgage insurance premiums (MIP) on FHA Loans will drop by 30% as of March 20th of this year. This monthly premium is added to the payment amount of all FHA loans.
According to a news release by the HUD (US Department of Housing and Urban Development):
“The 30 basis point annual MIP reduction will apply to almost all Single Family Title II forward mortgages insured by FHA. Further, the reduction applies to all eligible property types, including single family homes, condominiums, and manufactured homes, all eligible loan-to-value ratios, and all eligible base loan amounts.
The average FHA borrower purchasing a one-unit single family home with a $265,000 mortgage will save approximately $800 this year as a result of FHA’s premium reduction. For the same borrower with a mortgage of $467,700 – the national median home price as of December 2022 – FHA’s annual MIP reduction will save them more than $1,400 in the first year of their mortgage. In addition to providing overall savings to borrowers, a lower annual MIP can also help more people qualify for a mortgage.”
Other loan types do not require buyers to pay for a MIP but the down payment requirement for these loans can be 20% or greater while the FHA typically requires only a 3.5% down payment.
We would love to help you find the setting for your next chapter in life and help you explore the greater affordability provided by this new development in financing. Give us a call today!