FHA PMI Insurance Premium Is Reduced

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So, what does this mean?  The Federal Housing Association insures loans for borrowers who get FHA loans and traditionally, the borrower will put down less than 5% of the purchase price.  The PMI is insurance the borrower pays FHA in case they default on the loan and is included in the monthly mortgage payment.  For example, a $300,000 dollar loan would have a PMI of approximately $337.50 per month.  With these new changes, the new cost for the insurance with the same loan amount is approximately $212.50 per month.  I know what you’re thinking.  I am selling my house so how does it affect the sale of my property?  If your house’s value is $315,000 or less, there will be more buyers who can afford to purchase the property because with the reduced PMI payments, buyers can afford higher priced houses.  This means if you plan on selling your house there will be potentially more buyers interested in looking at your property and a quicker sale.

            With this news, you want to know if interest rates will increase any time soon.  The current interest rate for a 30 year fixed mortgage has been floating around 3.75% to 4.0% for the past couple of months.  The big question is when will they go up and how will it affect the housing industry. The federal government has said that interest rates will not increase until the economy shows multiple quarters of strong growth or inflation increases.  Most economists believe it will be sometime towards the end of this year, although this is still speculation.  In the past when interest rates increase more buyers enter the real estate market and look to purchase a home from fear of missing the opportunity.  What this all means is that both things will bring around a lot more buyers looking at your property, so be ready.