3. MI rates are going down as interest rates are going up. Last year we saw mortgage insurance companies significantly reduce premiums on mortgage insurance (which insures the loan to the lender for borrowers making less than a 20% down payment. The biggest reductions are for those borrowers with higher credit scores, and the reductions were high enough that it made sense to refinance borrowers out of second liens and into one loan with MI. This year FHA is reducing its annual MI premiums by .25%. Outgoing HUD Secretary Julian Castro says that this action is directly tied to the rise in interest rates, but it really is significant. The former MI premium of .85% on the 30- year fixed 96.5% LTV is now just .60%. This is a big enough savings to offset much more than a .25% increase to rates. And with rents rising, an affordable monthly payment on a home is going to make a lot more sense.
Alexandra Swann has a master's degree in history with emphasis on the French Revolution. Her novel, The Planner about an out of control, environmentally-driven federal government, is available on Kindle and in paperback. For more information, visit her website at http://www.frontier2000.net.