The mortgage industry is abuzz with chatter about the latest FHA loan rate cut. On Monday, the U.S. Department of Housing and Urban Development announced reduced fees for mortgage insurance premiums. While many in the realm of realty approved the move, there have been dissenting views as well.
Let’s examine the potential pros and cons surrounding this recent development.
The Good
USDA Secretary Julián Castro had talked about how the rate cut can bring about savings for families with an FHA mortgage. He sees it as a means for the agency to “pass along some modest savings to working families”.
To this, we can concur. Lesser MIP payments mean a potential savings of $500 for FHA-insured homeowners. That’s a considerable sum of money that could be diverted to bills and other equally important expenses.
A repeat of the 2016 rate cut could very well have the same effect this time around. Slashing the annual insurance fees some coupled with low mortgage rates could bring in more new loans or refis.
The Bad
The impending change in administration could find the FHA singing a different tune after January 19. Incoming HUD secretary Ben Carson could overturn this new policy before it can even take effect.