Last week, President Obama announced a plan that could save first time home buyers hundreds of dollars a year and help energize the housing market. The new policy would significantly decrease FHA mortgage insurance premiums, which have drastically increased over the past few years. With such a large increase in the past few years, home buyers in Knoxville, and across the country, have been forced to pay high mortgage insurance premiums or have opted to wait until they have the money for a large down payment.
So, what does this change in policy mean for Knoxville first time home buyers?
One very key thing that Knoxville first time home buyers who buy with FHA loans will see a very large amount of saving under the new policy. Since 2010, FHA mortgage insurance premiums have increased five times. They have jumped from .55 percent of a loan’s value to 1.35 percent of a loan value. Under the new policy, FHA mortgage insurance premiums will be lowered to .85 percent by the end of January 2015.
Just to provide an example, the decrease in premiums will provide significant savings for first time home buyers. For example, a $200,000 loan in 2010 had a mortgage insurance premium of $91.66 per month. As the FHA insurance premiums currently stand, a home buyer would now pay $225 per month on the same loan. Under the new policy, a homeowner would pay $142 per month.
In addition, the policy is also encourage the FHA to clarify mortgage guidelines. After the mortgage bust, many lenders have been forced to turn away buyers with high credit scores, due to unclear regulations.
For Knoxville first time home buyers, this is fabulous news. FHA loans have always been popular loan for Knoxville first time home buyers who have great credit but lack the down payment for a conventional loan. With such a drastic increase in mortgage insurance premiums, many first time buyers have opted to wait to buy with a conventional loan. With the improved policy, many Knoxville first time home buyers may opt to buy this year, which is great news for the Knoxville real estate market.
Are you thinking about buying a Knoxville home this year? If there is anyway Knoxville Home Team can assist you, please let us know, you can give Rick at call at 865-696-9002 or send an email to [email protected]. Kati can be contacted at 865-392-5880 or via email at [email protected]. Also, be sure to check out our Knoxville Home Search Page to see what homes are for sale in the Knoxville area.