FHA Loans in Greater Chicago Just Got More Affordable
Mortgage insurance premiums on FHA loans were just cut by a quarter of a percentage point, dropping the annual cost .60 percent of the loan balance for most FHA borrowers. This change, which may be reversed after President-elect Trump takes office, should save new FHA-insured homeowners an average of $500 per year.
As an example, if your loan balance is $250,000, the monthly mortgage insurance would drop from $177 to $125 at the new mortgage insurance rate. This savings can help new buyers afford more home as every $50 in monthly savings translates to about an extra $10,000 in loan amount. Basically, the payment on a $250,000 mortgage at the new rate is the equivalent of a $240,000 at the old, more expensive rate.
FHA mortgage loans are a popular loan choice for many first-time buyers in the Greater Chicago market since it requires only 3.5% down and offers looser credit requirements. Stay tuned as this decision may be overturned, but in the meantime, it looks like purchasing a home just got more affordable in our market. For more information on FHA loans, call 708-531-8388.