Big news: FHA has lowered mortgage insurance premiums! This should help more buyers enter the marketplace…right? Maybe not. For a while FHA had almost priced itself out of the marketplace…but let’s see who can really benefit from this decrease in fees.
With a FICO credit score of less than 700: before the reduction from FHA, on the purchase of a home with FHA the monthly payment would have slightly higher than if purchased with conventional financing with PMI. After the FHA reduction, your payment would be slightly lower than the conventional payment.
With a FICO credit score higher than 700: your FHA loan payment would be slightly higher – of course there are many other issues to be taken into consideration.
With conventional financing, PMI can be canceled once your equity reaches 20% of the value of your home…with FHA, the mortgage insurance can continue for the life of the loan. So, the lowering of FHA mortgage insurance can be a boon for some, it may not necessarily be for all. Be a good REALTOR, advise your clients to comparison shop. It may save them $$$ in the long run.
Until Next Monday…