The White House announced Wednesday that the Federal Housing Administration will significantly lower the fees it charges borrowers, a move that could save home buyers hundreds of dollars annually and help jump-start the housing market.
The "annual premiums" on FHA loans, an especially popular source of financing for first-time home buyers, have increased five times since 2010. They jumped from .55 percent of a loan's value to 1.35 percent today. Those fees, which are tacked onto the monthly mortgage payment, will drop to .85 percent at the end of the month. The White House projects the lower fees will entice 250,000 buyers to take out FHA loans in the next three years, and that the new borrowers will save an average of $900 annually.
President Obama plans to outline this plan Thursday when he delivers a speech in Phoenix about the housing market, which has been struggling to fully recover in part because mortgage costs are high and access to credit remains tight for many Americans.