Obama to cut Mortgage Insurance Premiums for FHA loans:

The Washington Post- 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. Those fees will drop to .85 percent toward the end of January. The White House projects the lower premiums 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 highlight the new policy 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 lending standards tight. Already, the president’s critics are bashing the decision. They say lowering the fees heightens the chances of a taxpayer-funded bailout for the agency in the future.

In his speech, the president also will call on the FHA to cut red tape and clarify what regulators expect of lenders. Since the housing bust, lenders have been turning away buyers by demanding unusually high credit scores on government-backed loans -- exceeding even the government’s own criteria. The industry says it’s trying to insulate itself from financial penalties. The White House has been alarmed by the reluctance to lend, and it wants the FHA to address the industry’s concerns in the coming months.

For a typical buyer this means a savings of $470 per year for  every $100,000 borrowed.  This is great news for affordable housing!