Let’s be honest, the average American has seen his or her fair share of debt problems by the time seriously buying a home comes to mind. By this time student loans, over-spending, or unfortunate life events may have your credit score attempting to dig itself out of a grave. Thankfully the tide may have just turned, washing over worries, and reinvigorating the hopes and dreams of prospective home owners.
FHA (Federal Housing Administration) has just announced that they are cutting annual mortgage insurance premiums from 0.85% to 60%. That my friend is a math equation that = HOPE for those struggling to meet the requirements of conventional lenders. In fact, NAR (National Association of Realtors) President, William Brown said, “Now, we have a real opportunity to get back on track.” Let’s not just take the good news and run though. To understand how this affects us in the present, we must first understand how we got here.
Recess is Not Always FunRecess Is Not Alwys Fun
Following the Recession of 2008, the housing industry entered a degree of nervousness that sent shockwaves through the market. FHA increased monthly mortgage premiums to levels that priced up to 1.65 million renters out of the market. In other words, lenders were so scared that they wouldn’t get paid back they were attempting to cover their rear ends. The FHA claimed it needed to strengthen its MMIF (Mutual Mortgage Insurance Fund). Fast forward to the present day, continued growth in the MMIF has resulted in the glorious reduction mentioned in the title of this blog. I don’t know about you, but when I see percentages and acronyms I just want to cut to the chase. What exactly does all this mean?
An Offer You Can't Refuse
Here’s the simple break down;
FHA mortgages assist buyers on fixed income by accepting a lower down payment than traditional loans. Along with this home loan you are required to get a certain amount of insurance. Lowering the insurance premium ensures more responsible borrowers are suddenly eligible to finance a home through FHA. The more borrowers get FHA loans, the more money gets put into that MMI Fund. This keeps everyone happy and at the least cuts out a huge excuse to raise premiums. This basically all means that they want you to get that home, maybe even more than you do.
There it is, the good news you were looking for. Now is the time. Don’t let this be another year where you look back and say, “I should have…” The path has been laid out for you, all you need to do now is walk it.