What Is the FHA Doing With Its Mortgage Insurance Premium?
The FHA will reduce its mortgage insurance premium to lower the monthly payment for the loan buyer. Here’s what that means for you.
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For the first time in two years, the FHA will reduce its mortgage insurance premium to lower the monthly payment for the loan buyer. Currently, an FHA mortgage insurance premium is based on 3.5% down, which is 0.85% of the loan amount. On January 27th, it will be reduced to 0.6% of the loan amount.
However, if you put 5% or more down, the premium will be reduced to 0.55% of the loan amount, which would be a substantial amount of savings, depending on your loan balance. With this new insurance premium being lowered, you could save as much as $55 or more per month if you purchase a home through the FHA.
This new change could save you a lot of money, depending on your loan balance.
This change should make it tougher for people to decide between a conventional loan and an FHA loan. A lot of people with 5% down or more used to go with a conventional loan because it would result in a lower mortgage premium. With this new development, though, FHA loans are going to compete with conventional loans.
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