Last week Donald Trump announced a new executive action that suspended FHA Mortgage Fee cuts.Homeowners with Federal Housing Administration (FHA) backed mortgages were anticipating a 0.25 percentage-point rate cut on insurance premiums to take effect on January 27th. The reduction would have lowered overall payments by an average of $500 a year for millions of homeowners.
Those plans are now “suspended indefinitely” according to the Department of Housing and Urban Development.
FHA insured loans are important because they make it possible for first-time homebuyers to qualify for a mortgage, even if they have bad credit or don’t have a lot of cash for a down payment.
Homeowners are also required to purchase two kinds of insurance to qualify for a FHA loan. One of the insurance premiums is paid upfront, while the other is rolled into the monthly mortgage payment.
Those monthly payments are often quite high and can be a burden. The expected 0.25 percentage point rate cut would have reduced monthly payments and given struggling homeowners some extra breathing room according to the Penny Hoarder.