FHA Loans Become More Affordable as the FHA Reduces Mortgage Insurance Premiums
Costa Mesa, CA (PRWEB) January 29, 2015 -- In April 2013, the FHA increased the monthly mortgage insurance from .55 to 1.35 to help offset the insolvency of the agency. Since then the FHA is not solvent again and is taking proactive step to help keep the affordability of new homebuyers. They are decreasing back to .80 but still higher than the previous .55. FHA Approved Lenders such as Secure One Capital, will continue to have strong underwriting criterion, ensuring that new FHA loans will be made to eligible borrowers.
U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration is lowering FHA mortgage premiums by half a percent in order to save more than two million FHA homeowners an average of $900 annually. The Obama Administration estimates that as many as 250,000 new buyers would be eligible to purchase a home over the next three years.
The change comes as the FHA has been losing market share to Fannie Mae and Freddie Mac due to fee increases that began in 2008. Over the last four years, the percentage of first time homebuyers using FHA backed loans fell from 56% to 39%. The premium increase was necessary after the dramatic rise of foreclosures during the recession that reduced the FHA’s reserve fund below its congressionally mandated minimum of two percent of the value of all outstanding FHA loans. The FHA increased premiums to effectively restock reserves and is on track to meet the two percent minimum in a few months.
The Federal Housing Administration is a mortgage insurer and not a mortgage lender. FHA annual mortgage premiums are paid in 12 monthly installments every year and lasts for the entire life of the loan. This is contrast to insurance for conventional mortgages that can be canceled once equity reaches 20 percent. Borrowers must also pay an upfront premium of 1.75 percent that usually is added to the principal loan amount.
FHA loans are now better positioned to be an attractive option for homebuyers with less than excellent credit. At present, eligible homebuyers can lock an FHA mortgage rate with Secure One Capital near 3.5% for a 30 year fixed loan and a minimal down payment. With the annual MIP rate of 0.85 percent, the annual rate could be estimated to be near 4.3%, far below historical standards. Secure One Capital also offers FHA Streamline Refinances for borrowers who are already in an FHA loan.
Secure One Capital, a BBB A+ business, is currently accepting applications for FHA mortgages and FHA Streamline refinances. Fannie Mae and Freddie Mac have also recently announced low down payment mortgage options that could be a better option for borrowers that meet the necessary credit requirements. Secure One Capital’s friendly Family Mortgage Planners can help families find the right loan product for them, whether it is an FHA loan or something better. To apply for an FHA mortgage or refinance, borrowers should visit http://www.secureonecapital.com or call (877) 810-8587 to speak with a licensed Family Mortgage Planner to see if they are eligible.
Felicia Ceballos, Secure One Capital Corp, http://www.secureonecapital.com/, +1 877-810-8587, [email protected]
Share this article