The Federal Housing Administration cut premium fees on mortgage insurance, and buyers are taking notice by entering the market and purchasing properties and homes. Due to these cuts, more first-time buyers specifically have been attracted to the real estate market.
These cuts by the FHA average a $900 decrease each year. Accor
The Federal Housing Administration reduces premium costs,
ding to Florida Realtors, these cuts and therefore more money in the pockets of buyers, could be prompting first-time and younger buyers of the millenial generation to purchase real estate. The Realtors use the fact that FHA loans were used in 23 percent of financed home purchases in the second quarter compared to 19 percent during the same period one year earlier, according to RealtyTrac, to assume that the cuts are prompting new buyers.
“So far, the FHA premium reduction is having a bigger impact on getting millennial first-time buyers and other low down-payment borrowers, such as former homeowners returning to the housing market, off the fence [compared to other federal programs],” says RealtyTrac Vice President Daren Blomquist.
Data also finds that the average price of homes purchased using the loans is 102% of the average estimated market price, as compared to homes purchased using other loans that average 101% of the market price.
“Borrowers using FHA-insured loans are leveraging the savings from the premium reduction to submit higher offers,” says Blomquist.
However, purchases made with loans that have less than a 3% downpayment have held steady in recent months, showing that Fannie May and Freddie Mac’s 97% loan-to-value ratio has not had much of an effect yet.
There are so many factors encouraging first time or seasoned buyers to enter the real estate market, and you should too! RE/MAX Paradise has so many amazing properties just waiting for you to fall in love with. Don’t wait another day to contact an a RE/MAX Paradise agent today who can guide you as you enter the healthiest real estate market of the decade!