Now that FHA has announced that they are reducing the Monthly mortgage insurance premiums from 1.35% to .85% what does that mean for the average first time homebuyer? A buyer who is getting a mortgage of 300,000 would save $1,500 per year with the new rates.
"That is a substantial savings and will be very helpful for alot of first time homebuyers, but the bigger story is how it increases the borrowers purchasing power" says Joseph & Jared Garcia of Associated Mortgage Bankers located in Ronkonkama.
The same borrower that qualifies for a mortgage of $300,000 at the old rates would now qualify for approx $25,000 more with the new rates. This gives the purchaser more options. Anthony Garcia, Broker of Performance Residential Realty Corp. says with today's market and the limited inventory the extra purchasing power of 10-25 thousand really opens up the door and gives home buyers access to alot more inventory.
The change in MIP rates is a step in the right direction and loosens up the tight mortgage guidelines that borrowers face when they are buying a home. It allows buyers to have access to buy houses that they could not qualify for last month. While this isnt going to be a monumental swing it gives first time homebuyers an edge in a market that has them feeling like there is no inventory.