The FHA offers many new programs and incentives for new homebuyers to take advantage of so that
they can be part of the effort to ease the
credit crisis. If you are in the process of shopping for a mortgage
prior to shopping for your new home, it can benefit you to learn about
programs that you may qualify for that are being created by the Federal
Housing Administration and piloted.
One such plan, which is has been approved as a four-year pilot
program, is referred to as the FHA HAWK Program. Read on to learn how
this program works and how it can affect mortgage insurance premiums.
What Is The HAWK Pilot Program?
The FHA HAWK program, which stands for Homeowners Armed With
Knowledge, is designed to help first-time homebuyers make educated
decisions when borrowing and buying a home. Individuals who are eligible
to participate must qualify and meet the definition of first-time home
They will also be required to complete a housing counseling and
education program that is available through HUD where they will learn
financial information that can help them make smart home buying
Some of the topics covered in the educational program include: how to
better manage finances, mortgage options, how to evaluate
affordability, understanding your rights and the responsibilities that
come with homeownership. Upon completion of the program, the applicant
can submit their application for an FHA-insured mortgage and receive
specific FHA mortgage insurance pricing incentives that will lower
What Type of Mortgage Insurance Incentive Will You Receive?
Once you participate in the program, the Federal Housing
Administration will give all of the borrowers who qualify for the
incentive a mortgage insurance premiums incentive by applying a 50 basis
point reduction in the upfront premiums and a 10 point reduction in the
annual premium starting at the time the loan originated.
As long as the borrower stays in good standing with their lender,
they will receive these incentives and fee reductions for the life of
the loan. This brings the upfront premiums down from 1.75 percent to a
more manageable 1.25%. Add in the fact that you are saving on annual
premiums that range between.45 and 1.55 percent, and you can see how
beneficial this program can be over the period of 30 years. Finance
experts predict that the average buyer will see a savings of $325 per
year, which is a savings of $9800 over a 30 year loan term.
The FHA is piloting this new HAWK program in an effort to reduce
delinquency of borrowers who borrow from FHA-insured lenders and to also
reduce the costs of loan processing. By offering first-time homebuyers a
discount to learn about the market, the FHA is trying to battle the
ongoing credit crisis and in the same time service more educated buyers.
If you would like to learn more about how you can reduce the mortgage
insurance premiums that you pay initially and throughout the life of
your loan, contact your trusted mortgage agent and discuss your options
when it comes to the HAWK program.