FHA mortgage insurance premiums to fall

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Mortgage rates have been on the rise, but the U.S. Department of Housing and Urban Development said Monday that it will cut mortgage insurance premiums on Federal Housing Administration loans.

The reduction of 0.25 percent would mean $500 in annual savings for a borrower with a $200,000 loan. The lower premiums take effect Jan. 27, HUD said.

FHA loans have become popular in recent years because they require low down payments and only mediocre credit scores. But because those factors mean FHA loans pose a higher risk of default, borrowers must pay higher rates for mortgage insurance, which protects the lender against default.

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