Among the first moves Donald Trump made as President was to put on hold a planned rate cut to FHA mortgage insurance that former President Obama had announced in his final week in office. The decision was made to indefinitely suspend the decrease which the California Association of Realtors estimates would have saved borrowers an average of $860 a year.
The FHA (Federal Housing Administration), insures home loans in the event that a borrower defaults. The government agency collects fees to cover liabilities. The Obama Administration argued that the FHA had sufficient reserves on hand to meet future claims, making the cut easy to absorb. Trump's cabinet pick Ben Carson stated that the issue needed to be "really examined" before implementing any kind of change. Republicans argued the Obama decision was made hastily.
Last year the FHA insured 1.26 million home loans nationwide. FHA loans provide low down payment options – as little as 3.5 percent – which can help families who cannot afford the requisite twenty percent.
Today, conforming no-point 30-year fixed rates are averaging 4.25 percent while the 15-year rates are near 3.375 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.