A bonus for FHA borrowers

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In early January, President Obama announced that he would lower FHA mortgage insurance premiums to help lower the mortgage payments of future FHA borrowers who are planning on purchasing or refinancing. On Jan. 26, those lower mortgage insurance premiums went into effect.

Most lenders require 20 percent down on the purchase of a house, but the Federal Housing Authority allows borrowers to buy a home with as little as 3.5 percent down. FHA mortgage insurance covers the lender for the difference in case the borrower defaults.

How much did President Obama save borrowers by lowering the premium? For every $100,000 mortgaged a borrower saves $500 per year. This decrease is has been well received by the mortgage and real estate industries and is long overdue.

During the financial crisis, the FHA mortgage insurance premiums where increased to help cover excessive losses due to the high amounts of foreclosures. Now, with the market stabilizing, we should hopefully see even more reductions in the future.

About Ron Ricchio

Renato (Ron) Ricchio is president of Chicagoland Home Mortgage. He grew up in Westchester and attended St. Joseph High School and DePaul University, taking a job as a loan officer in the mortgage industry soon after graduating with a bachelor's in finance in 1991. He started his own company in 2001, which he operates today. He has been ranked in the top 150 loan originators in 2010 and 2011 by Origination News. Ron is happily married with three beautiful children. A board member of San Francesco Di Paola Society and the founder of Ricchio Family Toy Drive for Lurie's Children's Hospital, he enjoys cooking and spending time with family and friends.

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