New-home communities bolstered by MIP reduction
Feb 6, 2015, 1:21 PM | Updated: Oct 10, 2024, 2:00 pm
The latest dip in interest rates, coupled with the announced reduction in the Federal Housing Administration’s annual mortgage insurance premiums (MIP), has spurred activity in many local new-home neighborhoods.
“Sales volumes have been increasing the past few months,” said David Duncan, listing agent for Pacific Ridge’s CreekWalk community in Marysville.
A fact sheet released by the White House said the reduction in premium-from 1.35 percent to 0.85-is expected to create opportunities for 250,000 new homeowners to purchase a home over the next three years.
PMI is applied to the monthly mortgage payment of buyers who put down less than 20 percent. This additional monthly cost can play a significant role in what a buyer can afford. The borrower buyer must build up equity equal to 20 percent of the home’s value for PMI to be removed.
Wells Fargo’s Kari Kuipers, new-home finance specialist, said the savings for a lower MIP can be significant. For example, on a on a $200,000, 30-year fixed home loan with less than a 5 percent down payment, a buyer would save $818 after one year and more than $7,400 after 10 years in a community like CreekWalk.
Duncan said he anticipates the new FHA fee change will keep the demand high for new homes in communities like Marysville. Though the inventory of homes in Seattle is dwindling, the addition of new-home neighborhoods gives prospective buyers a greater number and wider variety from which to choose.
