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2015 FHA Programs
President Obama released the details on a plan for a new lower cost FHA Mortgage Insurance Program. The Plan that President Obama announced last week was to reduce premiums charged by the Federal Housing Administration (FHA).President Obama will seek to address the ongoing housing problem, with a new program that will begin Jan. 26, 2015 and will reduce costs significantly of struggling Americans who pay FHA mortgage insurance payments. This plan will assist many Americans, through providing low insurance rates on federally issued mortgages to first time home purchases, minority Americans and struggling us citizens. This plan, while modest, will produce savings of $900 a year for each home-buyer. The best part of this is it, doesn’t require congress’s approval since lowering FHA fees is under the control of President Barack Obama and the HUD Secretary.
The FHA program is designed to insure loans made to mortgage borrowers who make down payments that are as small as 3.5% of the value of a house. This is the key that makes the FHA program popular among first time home buyers who may not have a lot of money saved up (or liquidity in current properties). The FHA currently charges 1.35% per year in mortgage insurance fees. The new rate will reportedly be 0.85% per year, a full 0.5% reduction. This will be the equivalent of a 0.5% reduction in interest rates for FHA mortgage holders and could mean savings of up to thousands of dollars per year, there is no doubt that this will be a boon to FHA loan holders and to potential home buyers.
Other options that Sellers are using to help first time home buyers navigate through the FHA loan program is that to assist the buys with a variety of costs There are a variety of costs that you can pay for your buyer when they choose a FHA mortgage. FHA has a higher limit to the percentage of the seller credit in comparison to the conventional mortgage, which only allows for a 3 percent seller concession. FHA loans allow a 6 percent seller concession with certain restrictions.
The seller can pay for discount points to bring the buyer’s interest rate down or closing costs themselves.
Any other costs that are credited will affect the buyer’s loan amount. These charges include moving costs, costs to repair the home or any other costs in connection with the condition of the home. If you decide to contribute to these costs, the dollar amount of the buyer’s mortgage will go down accordingly. For example, if you give a $500 credit for a home repair, $500 will be deducted from the loan amount, affecting the overall LTV.
At Present, FHA mortgage insurance on most 30 year fixed FHA loans is at a rate of 1.35% per year, which is still really good.. With the new guidelines, the mortgage insurance rate will be 0.85% per year. On a $200,000 FHA loan, that is a savings of $84 per month, or about $1000 per year.
However small, this move by the president shows just how hard it is to recharge the housing sector since the 2008 mortgage crisis. President Obama’s plan should start a process that could rope 250,000 new house buyers in the real estate market across the US. This will lower refinancing costs for an estimated 800 thousand home buyers, Federal Government officials said. This is just a minute fraction of the over 2.5 million homes that go to first-time home buyers a year in a healthy market, but it is for a segment of the population that requires this help. While housing usually leads the country out of recession, this time, it is an anchor, the hope is with rising employment, more buyers on the edge that could afford will be tempted to come back into the housing market.
US Federal government Administration officials are not as down on the housing market as many media pundits say, they have some good facts to back them up their opinions too.,
- In most markets home prices have risen 30 percent from their recession lows.
- Of the roughly 13 million underwater homeowners, around 10 million have since come up from under water
- More than 8 million homeowners have been able to refinance their mortgages, through the Obama’s (HAMP) or because of industry standards set by the program.
- 3 million homeowners have been helped by the sister program of Home Affordable Refinance Program (HARP).
FHA Loans for those with poor credit
The mortgage borrower’s credit score is important in the actual amount of the down payment required for your FHA Mortgage. Typically, if your credit score is higher than 580, a borrower will only be required to put down 3.5 percent of the house price. If your credit score hovers between 500 and 580, the mortgage down payment requirement is increased to 10 percent, which can be hard for some borrowers. These are FHA guidelines that are strictly enforced by the FHA and might be increased depending on the lender that you decide to use. Lenders have their own system in how much they want as a down payment on a loan in order to decrease the risk of foreclosure.
The president’s F.H.A. move is aimed at the key problem, first-time home buyers, s typically, such buyers account for 40 percent to 45 percent of home purchases.
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