Monday, January 23, 2017

President Trump Executive Order on Private Mortgage Insurance

Dear America - President Trump did not raise mortgages for all American home owners

Quick Synopsis: When you take out a mortgage to purchase a home you generally have a down payment that can range anywhere from 3.5% - 20% of the total purchase price. In the height of the ruckus leading up to 08 crash, banks were doing 0% down loans. We learned our lesson and stopped doing that. To assist first-time home buyers and those with lower incomes or maybe lower credit scores, exists the FHA Mortgage program. The program is run by the U.S. Department of Housing and Urban Development. Anytime the down payment is less than 20% the homeowner is required to carry "private mortgage insurance"often referred to as PMI. The insurance carries a monthly premium that is in addition to your principal, interest and property taxes. You pay this additional premium until you've reached 20% or more in equity on your home. 

Sometime last week the Obama Administration announced that they would reduce the PMI rate by 0.60 percent. This would have resulted in an average yearly savings of about $500. The reduction was set to take effect on 1/27/17. Of course President Trump is not going to have homeowners save money, duh! So in his second executive order that he signed on Friday, he cancelled the reduction that would have gone into effect this week. So everyone's mortgage's will stay the same. He did not raise mortgages as I saw several folks report. 

I suspect this to be a total setup by the Obama Administration, and Trump fell for the trap. Hat tip to PBO :) 

The next 100 days are going to be filled with executive orders and a lot of reversals on things put in place by President Obama and his administration. This is the time to become as engaged as possible and take the extra steps to decipher actual facts from "alternative facts." Let's not get caught up in the wave of sensationalism.

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