With the Federal Housing Authority reducing fees for agency-backed mortgage insurance plans, more potential home buyers in Connecticut will have more money to spend on housing.
“This is a big deal,” said Norbert Deslauriers, interim director of the Connecticut Housing Finance Authority. “We did about 60 percent of our mortgages FHA insured and we expect that number to go up for 2015.”
Mortgage insurance is required if a home buyer places a down payment on a house that is less than 20 percent of the home’s value. The insurance acts as protection for the lender, not the home buyer, to ensure that the entire mortgage will be paid off.
The announced change from the Obama administration could lead to savings anywhere from $600-$1,000 per year for individual homeowners.
“This step means real money in people’s pockets to spend on things they want and will drive the economy because consumer spending on home buying and everything that goes into a home are the Launchpad for our economy,” said Sen. Richard Blumenthal, who, along with more than a dozen other Democrats, urged such a change at the Capitol.
Realtors are excited about what the reduction means for home sales.
“That mortgage premium can make a difference on if someone even qualifies for a loan or not so that’s one of the major components of having it reduced,” said Linda Fercodini, a real estate agent in Wolcott.
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Fercodini said the industry is referring to 2015 as “the year of the first-time home buyer,” which she says so far rings true, at least in her office.
“The calls coming into the office have been incredible," she said. "The agents are all very busy out there right now.”
