The rate cut would have saved $540 a year for the typical FHA borrower in Palm Beach County. But, with memories of the mortgage meltdown still fresh, Congressional Republicans worried that the move would shift risk from private borrowers onto taxpayers.
Because FHA loans are easy to qualify for, they’ve become a staple for first-time buyers. FHA loans require down payments of only 3.5 percent (compared to 20 percent for the standard mortgage), and they’re offered to borrowers with credit scores as low as 580 (well below the 740 level required for most Fannie Mae and Freddie Mac loans).
The downside? Borrowers must pay hefty premiums for mortgage insurance, coverage that protects the lender in the event of default. Hence HUD’s announcement earlier this month that it would shave 0.25 percent from mortgage insurance premiums starting Jan. 27.
According toan analysis by ATTOM Data Solutions, the typical FHA borrower in Palm Beach County has a loan amount of $216,000. The 0.25-point cut would have saved that borrower $540 a year.
Because of the high mortgage insurance costs, FHA borrowers typically aim to boost their credit scores and build enough equity to refinance into a less expensive loan.
Author:Victor DeFrisco Phone: 561-951-3759 Dated: January 31st 2017 Views: 94 About Victor: ...
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