Recently FHA and VA have reduced their mortgage insurance (MI) premiums and funding fees. Mortgage insurance is a policy that the lenders require if a homeowner doesn’t have the required threshold of equity, typically 20 percent. The MI policy protects lenders in case the borrower defaults on the mortgage. In the case of FHA, they have reduced their monthly MI factor from .85 to .55. This decrease in the monthly MI helps lower borrowers’ monthly payment and will have a beneficial effect, especially for first time home buyers as it will help offset the current higher rates and higher home costs.

The VA doesn’t have a monthly mortgage insurance but rather has a funding fee that is added to the VA loan. The VA has reduced this funding fees for first time use and subsequent use as well. This will also help veterans to lower their monthly mortgage payments.

Keep in mind that in this high mortgage interest rate environment, it’s very important for borrowers to shop their mortgage around as rates and fees will vary from lender to lender. So if a borrower can combine the new reduced mortgage insurance fees with a lower interest rate, this will help in their household budgets when buying a home.

Indigo Mortgage has historically offered some of the most competitive rates on FHA and VA mortgages. So be sure to shop that FHA or VA loan around before you settle on a lender. We have saved borrowers many thousands of dollars over the years in financing a home in New Mexico. Call or visit our Albuquerque office to learn more.