President Barack Obama Wednesday moved to make it cheaper for first-time and younger buyers to take out a mortgage.
Obama lowered the mortgage-insurance premium for borrowers who have a down payment of just 3.5 percent of the total home’s purchase price and finance the rest of the purchase with a loan backed by the Federal Housing Administration.
The reduction is expected to save the typical first time homebuyer an average of $900 a year on the insurance, the White House said. The insurance is required because they’re financing so much of the puchase and the loans are riskier.
Existing homeowners who refinance into an FHA mortgage will see similar reductions, the White House said.
The White House estimated that the change will help 800,000 homeowners save on their mortgages and 250,000 new buyers save on mortgage payments over the next three years.
