PMI Rate Cut? Whoa, Nellie!

The Obama administration yesterday announced that they would be cutting the rate for private mortgage insurance (PMI) premiums on FHA-backed mortgage loans. Most say this would amount to a decrease of roughly $20 per $100,000 loan.

What is PMI? From Bankrate.com:

When you make a down payment of less than 20%, the lender requires private mortgage insurance, or PMI. The policy protects the lender from losing money if you end up in foreclosure. PMI also is required if you refinance the mortgage with less than 20% equity.

 

I am going to make this short and sweet.

This cut is intended to go into affect on January 27th of this year. Notice anything about that? This will be one week after President-Elect Trump is sworn in. Mr. Trump has already said that he is going to strike many of President Obama’s executive orders on Day One. I have a feeling this will be one of them.

So, if you are planning on applying for a mortgage loan between now and January 27th, please keep that in mind. Remind your lender. While it’s usually a good idea not to get any loan that you can just barely qualify for, it may become more important to give yourself even more breathing room until this shakes out.

 

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