|Without HAWK counseling||With HAWK counseling|
|Tota, first five years||$17,000||$15,000|
|Savings, first five years||$2,000|
Homebuyers with small down payments have long relied on FHA loans, or loans insured by the Federal Housing Administration. But the cost of mortgage insurance on FHA loans increased significantly in recent years and it’s an obstacle to many borrowers.
The government is trying to ease some of that burden for borrowers who are willing to go through housing counseling before they purchase a home.
The FHA recently announced a program called HAWK. The program reduces the upfront fee the FHA charges borrowers to 1.25 percent of the loan amount, from 1.75 percent. That is if the borrower agrees to get counseling. It also reduces the annual mortgage insurance premium to 1.25 percent from 1.35 percent.
“It’s a pretty decent discount that you would get,” Walsh says. “If you get a $200,000 loan, you are going to save $1,000 upfront and 10 basis points yearly.” On that same loan, that would translate into about $17 per month in savings.
“For people that are aware of it, it would be crazy not to take advantage of this program,” Walsh adds.
“Plus, the counseling service should help people understand what it really means to buy a house.”
The FHA has not yet announced when the program goes into effect.
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