FHA to Lower Premiums

Effective January 26, 2015, the FHA (Federal Housing Administration) will lower the rate of the annual mortgage insurance premium paid on agency-backed 30-year fixed loans by a half percentage point, down to 0.85 percent of the loan balance from the current 1.35 percent.

This is an effort by the Government to increase the number of first-time home buyers which is currently at a 27-year low. According to estimates, this decrease in premiums will cut a borrower’s payment by as much as $900 per year and will hopefully allow 250,000 new buyers to purchase their first home in the next three years.

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