In an effort to help those who are buying a house for the first time, but cannot afford a conventional mortgage, President Joe Biden is proposing cutting insurance premiums on new Fair Housing Administration (FHA) loans.
While some say this will help prospective buyers achieve their dreams of homeownership, others believe this will continue to push home prices to record highs. Levi Kushnir, Founder/Owner, Stable Holdings, says the proposed savings on the insurance premiums is a paltry amount and, therefore, will not help low-income homebuyers in the long run.
President Biden recently introduced a plan in which insurance premiums on mortgages insured by the FHA would be cut. Those in the mortgage industry are seeking a reduction of $50 to $70 a month for new borrowers, but the FHA said any cut the agency proposes would be less than that. This proposal comes as median home prices exceeded $400,000 for the first time this year in May and the 30-year fixed-rate mortgage rate was 5.7%
Mr. Kushnir says the savings are negligible and would be wiped out by any mortgage rate increases. “For the typical homeowner, $70 a month is nothing,” he says. “This proposal is not going to save anyone any money. The facts of the matter are interest rates have gone up a lot more than the proposed premium cuts would be, the cost of living is becoming more expensive, and people just don’t have the same amount of money they used to have to spend on a home.”
