A New Bill might help you buy your first home. The new bill, passed by The House of Representatives, could help first time home buyers. The legislation proposes slashing the cost of upfront mortgage insurance. This would only happen for first-time homebuyers using mortgages backed by the Federal Housing Administration.
New Bill: The Housing Financial Literacy Act of 2019
Underneath its number, the New Bill has a wonderful name, The Housing Financial Literacy Act of 2019, The new bill, numbered H.R. 2162, mandates a course of home
ownership training for prospective first-time homebuyers.
- A Course in Homeownership: The new bill, if passed, stipulates that first-time homebuyers must take a housing ownership counseling program.
- The Purpose of the Course: In that program they learn about the financial challenges of sustaining homeownership.
- The Reward: Upon completion of the course, the first time homebuyers can “get a 25-basis-point discount (0.25%) on their upfront mortgage insurance for an FHA loan.” Mortgage Bankers Endorse the New Bill
Likewise, some powerful endorsement for the bill is happening among mortgage bankers.
The Mortgage Bankers Association have applauded the bill’s passage through the House of Representatives.
They stated, “MBA has long advocated for increased access to housing counseling…”
The mortgage bankers have long appreciated the difficulty of buying a house for the first time. They see this bill as a way to create a more positive experience for first-time homebuyers.
Likewise they expressed that the new bill would help those “unfamiliar with the homeownership process, as well as for other underserved communities,”
Mortgage Bankers Also Alert Legislators to Possible Pitfalls
However, Palm State Mortgage Company also wants you to know that the association warned that “adjustments to insurance premiums should be made carefully at HUD’s
discretion…” You see, we do not want to hurt the the FHA’s insurance fund in the effort to help the homebuyer.
On the one hand, we see the MBA supports the ideals behind the new bill. But, on the other hand, they also disapprove of “legislative change to FHA’s premium structure maintain.” And they want to make sure HUD maintains the power “to set insurance premiums that are consistent with actuarial evidence accepted by HUD.”
Proof of Value of the New Bill?
Rep. Joyce Beatty, D-OH, who presented the bill alongside Rep. Steve Stivers, R-OH, stressed the evidence that “enhanced financial literacy has proven to be effective.” They listed the skills behind good financial planning:
- Managing your credit,
- creating a budget,
- saving for retirement,
- purchasing a home,
Beatty stated “understanding the basic principles of planning, saving, and investing for the future is vitally important,” And she added, “Studies show that pre-purchase housing counseling equips first-time homebuyers with the much-needed financial skills and tools…”
And they use these tools to make informed financial decisions that ultimately benefit not only their families, She adds that such skills not only enhance the buyer and his family “but also the surrounding neighborhood and our entire economy.”
The New Legislation Goes to the Senate Next
The bill will now move on to the Senate for a vote. Only then will it move on to the president’s desk, and
Palm State Mortgage Company will be following this story closely.
Now, as you follow that story, it’s important to understand what is meant by “mortgage insurance” in the first place. We advise you to take a look at a previous blog which
explains the concept and expense involved in getting mortgage insurance.
Getting a break on the cost of mortgage insurance might be good incentive to buy your home, but you should know mortgage insurance itself will cost you in the long run as well as the short-run.
Congressman Beatty explained, “I urge the Senate to support this common-sense bill…” And she added that it encourages first-time homebuyers “to take greater control of their financial futures and provides greater opportunity for more Americans to realize the dream of homeownership in a financially responsible way.”
Palm State Mortgage will keep an eye on this new bill and let you know about, as Paul Harvey called it, “the rest of the story.”
Meanwhile, feel welcome to stroll through some of our basic blogs on house and mortgage hunting. Is this is your year to take the step into homeownership?