From The Colorado Springs Business Journal | Published January 11, 2015 | Written by Bryan Grossman
President Obama last week proposed lowering insurance premiums on FHA-insured loans by 50 basis points, claiming this would save 250,000 borrowers an average of $900 annually in house payments.
“The annual premiums on FHA loans, an especially popular source of financing for first-time home buyers, have increased five times since 2010,” according to an article in the Washington Post. “They jumped from .55 percent of a loan’s value to 1.35 percent. Those fees will drop to .85 percent toward the end of January. The White House projects the lower premiums will entice 250,000 buyers to take out FHA loans in the next three years, and that the new borrowers will save an average of $900 annually.”
According to a news release issued by RealtyTrac, a national source of comprehensive real estate data and housing information, “this reduction in insurance premiums means that instead of paying 1.35 percent for the loan amount each month in mortgage insurance, borrowers will now be paying just 0.85 percent of the loan amount each month.”
RealtyTrac analyzed the data and found this would save $917 a year on median-priced homes nationwide, according to the release, which is close to the claim Obama made.
“But we all know that no one actually pays the national median price for a home,” the release said. “People pay the price of a home in their market.”
RealtyTrac analyzed this on a county-by-county basis and created a heat map to show where homebuyers will save the most, and also what markets would be considered affordable for median income earners — where a median income earner would need to spend 28 percent or less of his or her income to purchase a median-priced home — after the reforms, and which markets would still be unaffordable after the reforms.
Approximate anticipated average annual savings by county in Southern Colorado:
El Paso: $960
Pueblo: $552
Douglas: $1,645
Teller: $886
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