The Obama administration announced that the Federal Housing Administration would be dropping its monthly mortgage interest rates from 1.35 percent to 0.85 percent. For Tucson’s real estate market it is something to get excited about.
An FHA loan allows a buyer to put down as little as 3.5 percent, but due to the higher risk of a small down-payment there is upfront and monthly mortgage insurance when taking on an FHA loan. The good new is the monthly mortgage insurance is now significantly less.
This change is going to make FHA loans for new buyers’ payments significantly less,
How much less?
On a $100,000 loan, that half a percent will save the borrower $500 a year.
Apply that savings to an FHA loan covering the cost of an average house in Tucson ($203,556, according to the December Tucson Association of Realtors’ scorecard), and the savings would be around $1,000 annually.
FHA loans are meant to help people of lesser means get into home ownership as a primary residence.
If you have an FHA mortgage with the higher monthly mortgage insurance rate of 1.35% the only way to get to have it reduced is to refinance your current FHA mortgage.