If you’re in the market for a mortgage or refinancing an existing one, then you’ll be glad to know that the U.S. Department of Housing and Urban Development (HUD) has announced that it will cut annual mortgage insurance premiums from 0.85% to 0.55%, effective March 20th. This announcement could save homeowners thousands of dollars over the life of their loan, so now’s the time to act if you want to take advantage of these savings.
What is Mortgage Insurance?
Mortgage insurance is an additional fee paid on top of interest rates and monthly principal amounts when obtaining an FHA-insured mortgage loan. This premium compensates for potential losses to lenders if a borrower defaults on their loan and isn’t able to repay their debt. In other words, it provides protection against foreclosure and other financial losses associated with defaulting on a home loan.
Benefits of Lower Mortgage Insurance Premiums
The HUD’s decision to lower annual mortgage premiums can have a big impact on borrowers’ pockets as this move could potentially save homeowners thousands of dollars over the life of their loan. For example, if you took out a $250,000 loan with an interest rate of 4%, your monthly payment would drop from around $1,347 per month at 0.85% (mortgage insurance) rates to around $1,293 per month at the new 0.55% mortgage insurance rate – a difference of more than $50 per month! Additionally, this reduction could make it easier for some buyers who otherwise wouldn’t qualify for a larger loan due to higher mortgage insurance payments associated with larger loans.
Click Here to view the FHA Mortgagee Letter announcing the changes
If you’re in the market for a new home or looking into refinancing an existing one, now may be the best time to take advantage of HUD’s announcement that they’ll be cutting annual mortgage insurance premiums from 0.85% down to 0.55%. The savings provided by this reduction could add up significantly over the life of your loan and help put you in your dream home sooner than expected!
Conclusion: It pays to stay informed about changes in housing policies because they can have a major impact on your budget and determine how soon you are able to purchase or refinance your dream home! HUD’s decision to reduce annual mortgage insurance premiums is great news for many homeowners but only those who act quickly will benefit from these savings before they expire on March 20th! So get out there and start shopping around; there has never been a better time than now!
