by Kinsey Love, marketing manager at Lewiston State Bank
Buying a home means spending a lot of time paying attention to the details, from blueprints to paint and everything in between. Buying a home means a lot of time searching and scrutinizing the options. All of this time and these details eventually lead to your dream home. Do you know where to start when it comes to building or buying your own dream home?
If you are in the market to buy a home right now, you are in luck. In an effort to make owning a home more affordable, the Federal Housing Administration has dramatically cut the costs associated with the mortgages it backs, from 1.35 percent of a loan’s value to 0.85 percent. A typical firsttime home buyer will save hundreds each year on mortgage payments, and even homeowners who already have a loan may be able to save.
The White House estimated that these new premiums will enable 250,000 new buyers to purchase a home. FHA loans are an important part of the economy; with smaller downpayment requirements, an FHA loan may allow a lower-income borrower to obtain a home loan that would be difficult or impossible without this program. FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. With lower premiums for mortgage insurance, the ability to own a home may become even more realistic for many borrowers.
Since new home sales have increased over the last couple of years[1], many first-time home buyers closed loans before the January 26, 2015 effective date for this change — meaning they’re paying the higher mortgage-insurance premiums. These borrowers are not eligible for the new premiums unless they refinance. These homeowners may want to consider refinancing and should contact an FHA approved lender to find out if refinancing now would produce savings.
There are other advantages to refinancing with an FHA streamline mortgage, including refinancing a mortgage without all of the paperwork, underwriting qualifications, appraisal, or time normally necessary when refinancing a home loan and it offers lower interest rates, lower monthly payments, the security of a fixed-rate mortgage and little or no cash due at closing.
If you are looking to build a home, the cooperative weather and some financing options can make this a reality right now. There are options to help you simplify your financing that can save you money on origination fees, such as the Construction + Mortgage option through Lewiston State Bank.
Whether you are looking to buy or build your dream home this spring, the financing conditions are favorable to potentially save you money.
[1] https://www.census.gov/construction/nrs/
