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Message
FHA to Cut Mortgage Insurance
Posted on 1/7/15 at 9:41 am
Posted on 1/7/15 at 9:41 am
Just coming across the wire on CNBC...
FHA to cut typical mortgage insurance from 1.35% to .85%.
I guess they finally figured out that the increases were creating a drag on housing.
FHA to cut typical mortgage insurance from 1.35% to .85%.
I guess they finally figured out that the increases were creating a drag on housing.
3
Posted on 1/7/15 at 9:42 am to Blakely Bimbo
Can you give some cliffs on how this will help me/average person, if any? 
Edit: I am taking this as my PMI will be reduced each month?
Edit: I am taking this as my PMI will be reduced each month?
This post was edited on 1/7/15 at 9:44 am
Posted on 1/7/15 at 9:47 am to OnTheBrink
Sorry, this was just a headline breaking news on CNBC. No specifics. Don't know if this is on current mortgages or new mortgages. Further details should be following.
Posted on 1/7/15 at 9:48 am to Blakely Bimbo
quote:
Further details should be following.
Thanks!
Posted on 1/7/15 at 9:53 am to OnTheBrink
More...President to announce tomorrow details in speech in AZ. Check news tomorrow.
Lowering to make competitive with Frannie and Freddie. Lowering before spring buying season.
No other details as to whether this will affect current mortgages.
Lowering to make competitive with Frannie and Freddie. Lowering before spring buying season.
No other details as to whether this will affect current mortgages.
Posted on 1/7/15 at 10:09 am to Blakely Bimbo
quote:
No other details as to whether this will affect current mortgages
i don't think it will. changes to fha have never affected existing mortgages in the past (thankfully, because it's only gotten worse)
Posted on 1/7/15 at 10:10 am to Blakely Bimbo
FHA mortgage insurance has two components - the upfront fee and the annual fee. The upfront fee I believe is 1.75% currently and the annual fee varies but for most people is around 1.35% (My numbers may be slightly off as they are constantly changing).
This is different than PMI, which is only annual OR you pay prepay it upfront, but not both.
FHA insurance costs have constantly moved upward since 2008 in order to replenish the fund. As foreclosures taper off, the fund may be stabilizing. Remember this is a government fund, so they are not supposed to make profit off of it... just have enough to be sound. If that's occurred, they may be able to lower the cost.
The higher premiums have definitely effected the market. Getting Freddie/Fannie coverage is still pretty tough for the lower end of the market, so FHA is the only option as far as down payment and qualification... but these people can't afford the insurance. Reducing the cost should open up the market. Bringing in poorer/younger purchasers will also allow established owners to sell their starter homes and move up in the market.
Like it or not... it appears one of the thing the O admin will focus on in the last two years is expanding mortgage availability.
This is different than PMI, which is only annual OR you pay prepay it upfront, but not both.
FHA insurance costs have constantly moved upward since 2008 in order to replenish the fund. As foreclosures taper off, the fund may be stabilizing. Remember this is a government fund, so they are not supposed to make profit off of it... just have enough to be sound. If that's occurred, they may be able to lower the cost.
The higher premiums have definitely effected the market. Getting Freddie/Fannie coverage is still pretty tough for the lower end of the market, so FHA is the only option as far as down payment and qualification... but these people can't afford the insurance. Reducing the cost should open up the market. Bringing in poorer/younger purchasers will also allow established owners to sell their starter homes and move up in the market.
Like it or not... it appears one of the thing the O admin will focus on in the last two years is expanding mortgage availability.
Posted on 1/7/15 at 10:11 am to lsujro
quote:
don't think it will. changes to fha have never affected existing mortgages in the past
Changing the annual premium for current borrowers, I believe, would involve modifying the terms of the mortgage, and I don't see that happening. But I could be wrong.
Posted on 1/7/15 at 10:59 am to Blakely Bimbo
This is good news.
On a $200,000 house, this will save homeowners around $100/month.
On a $200,000 house, this will save homeowners around $100/month.
Posted on 1/7/15 at 4:58 pm to anc
Details
So to confirm it is the annual premium.
I've always linked the annual mortgage insurance premium, financially, like an add-on, to the interest rate (except it's worse than that, because it is often not deductible).
So if someone has an interest rate of 3.5% and they are paying 1.35% insurance, it's as if they have a rate of 4.85%. Again, the numbers aren't exact, but it helps to explain it.
So basically we are cutting the rate by .5%.
But you also have to consider the upfront premium of 1.75% due at closing. Many people roll that into the mortgage, rather than paying it at closing... so really, you are paying an even higher rate... since you are paying interest on a higher balance.
So to confirm it is the annual premium.
I've always linked the annual mortgage insurance premium, financially, like an add-on, to the interest rate (except it's worse than that, because it is often not deductible).
So if someone has an interest rate of 3.5% and they are paying 1.35% insurance, it's as if they have a rate of 4.85%. Again, the numbers aren't exact, but it helps to explain it.
So basically we are cutting the rate by .5%.
But you also have to consider the upfront premium of 1.75% due at closing. Many people roll that into the mortgage, rather than paying it at closing... so really, you are paying an even higher rate... since you are paying interest on a higher balance.
Posted on 1/8/15 at 9:24 am to anc
quote:
On a $200,000 house, this will save homeowners around $100/month.
Maybe it is because I am just a shitty person, but I always twitch when I hear people taking FHA loans on $200k+ homes.
Posted on 1/8/15 at 9:34 am to TigerFanatic99
quote:
but I always twitch when I hear people taking FHA loans on $200k+ homes.
In the south, absolutely...
In the NE and California... 200K barely buys you a slum house.
Posted on 1/8/15 at 9:34 am to TigerFanatic99
quote:
Maybe it is because I am just a shitty person, but I always twitch when I hear people taking FHA loans on $200k+ homes.
Welcome to modern America.
Parents - "Hey kids! Just buy a house with little to no down payment! You can sell it in a few years for a small profit or at worst break even if you don't like it. Just look at how we did things when we were your age!"
Kids - "Ok. Hey wait a second, why did the value of the homes around me fall? Does this mean my house is worth less too? Yeah? Really? frick."
Posted on 1/8/15 at 9:45 am to StringedInstruments
No matter what, the bubble must be re-inflated...so we can sell, and buy the bottom. Rinse, wash, repeat.
Posted on 1/8/15 at 1:02 pm to NukemVol
quote:
No matter what, the bubble must be re-inflated.
The .gov is going to put all those new immigrants into housing while the student debt saturated natural born Americans can't qualify.
Posted on 1/9/15 at 8:04 am to Blakely Bimbo
Home prices are shooting up in Atlanta (slowing down slightly now, finally). I have no idea how people think this is somehow healthy. People just don't all of the sudden have 25% more to spend on a house in two years. It shouldn't be that volatile.
Posted on 1/10/15 at 8:56 am to NukemVol
Kinda the same real estate hysteria in the woodlands thanks to Exxons HQ. they didn't see the oil prices dropping like this and this spring there are far fewer support business relocations, so the sobering up is about to happen. So many people bought last Spring and will lose their arse as the market stabilizes.
The party is fricking over.
The party is fricking over.
Posted on 1/11/15 at 12:12 am to StringedInstruments
quote:
Welcome to modern America.
Parents - "Hey kids! Just buy a house with little to no down payment! You can sell it in a few years for a small profit or at worst break even if you don't like it. Just look at how we did things when we were your age!"
What's wrong with this if you know the house won't be your last one
Posted on 1/11/15 at 1:32 pm to HailToTheChiz
Because the housing market isn't as forgiving as it was twenty years ago.
Nowadays you're paying too much in PMI and most likely losing money in the value of your house. Turning around and selling in five-ten years will most likely net you a loss if you can even afford to sell at all.
Nowadays you're paying too much in PMI and most likely losing money in the value of your house. Turning around and selling in five-ten years will most likely net you a loss if you can even afford to sell at all.
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