Future homeowners in pricey Southern California got welcome news Monday after weeks of rising mortgage rates.
The Federal Housing Administration announced Monday it will reduce the annual insurance premiums most borrowers will by pay by a quarter of a percent, saving the average homeowner $500 this year, said U.S. Housing and Urban Development Secretary Julian Castro.
In San Diego County, the seemingly minor change will have more of an impact because home prices here are higher than much of the nation, saving the average borrower around $1,200 a year.
The rate change is basically immediate, applying to all homes that close escrow after Jan. 27. It only applies to federally-backed loans.
“After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” Castro said in news release.
Lower FHA rates also have an indirect path to homeownership as they only provide a back-up for lenders. The annual fees paid by borrowers are used to fund the administration’s insurance fund, which protects the agency from loans that go bust.
Kurt Branstetter, a senior loan officer in San Diego and branch manager at Nova Home Loans, said an extra $100 a month will be beneficial for borrowers already stretched thin.
“It’s a big deal and it’s good. Whether it sticks, we’ll see,” he said.
Click here to read the entire article and more by Phillip Molnar of the San Diego Union Tribune.