Lawmakers in the U.S. House of Representatives have approved a bill that would reduce the cost of upfront mortgage insurance fees on Federal Housing Administration-sponsored loans for first-time buyers.
The bill comes with a caveat however, as first-time buyers would need to undergo a housing counseling program about sustaining homeownership in order to qualify for a 25 basis point discount on their FHA mortgage insurance loan.
The Housing Financial Literacy Act of 2019, H.R. 2162, hasn’t become law yet, as it still needs to pass a vote in the U.S. Senate, HousingWire reported.
The bill basically wants to reward first-time buyers who improve their financial literacy via the counseling course, which has been certified by the Department of Housing and Urban Development.
“Whether you are managing your credit, creating a budget, saving for retirement, or purchasing a home, understanding the basic principles of planning, saving, and investing for the future is vitally important,” Rep. Joyce Beatty, D-Ohio, who co-sponsored the bill with Rep. Steve Stivers, R-Ohio, said in a statement. “Studies show that pre-purchase housing counseling equips first-time home buyers with the much-needed financial skills and tools to make informed financial decisions that ultimately benefit not only their families but also the surrounding neighborhood and our entire economy.”
Important real estate industry bodies including the National Association of Realtors have already said they support the bill as it will make buying a home more affordable for low-income families.
“The NAR strongly supports efforts to reduce FHA premiums,” said NAR President John Smaby. “H.R. 2161 will promote affordable and sustainable homeownership for American families.”
The Mortgage Bankers Association said it too supports the bill, having advocated for years for increased access to housing counseling. However, it warned lawmakers they should consider any reductions in FHA insurance premiums carefully, so as to “preserve the health” of the fund.