A bipartisan bill that passed the U.S. House last week would reduce costs for Federal Housing Administration loans if recipients go through financial literacy counseling, CNBC reports.
Called the Housing Financial Literacy Act, the measure would apply to first-time homebuyers who take out a mortgage backed by the Federal Housing Administration. Borrowers who go through the counseling — aimed at helping them be financially responsible homeowners — would get a discount on the upfront mortgage insurance that all FHA loans require borrowers to pay.
Due to that increased risk for lenders, borrowers are required to pay mortgage insurance to the FHA for many years or over the life of the loan (depending on the particulars of the terms), as well as an upfront mortgage insurance premium.
That upfront amount currently is equal to 1.75% of the base loan amount, and it can be paid at closing or rolled into the loan. The proposed discount of 25 basis points would reduce that amount to 1.5%.
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