The Tacoma times. [volume] (Tacoma, Wash.) 1903-1949, 1939-07-06

comes X pay off their loans Ad-
ministrstor Stewart MeDonsld
stated.
The average Of actual monthly
cost and proportion Of income used
declined perceptioly during the
year. Mr.. Mcdonald said. The pro-
portion Of the FHA's mortgage in
suranee business involving homes
valued al less than 5000 increased
during 1883 to SIS per cent from 50
per cent in 1897. he also announced.
Reach Lower Incomes
Mr.. Mcdonald pointed TO these
figures as evidence OF the fact that
private capital for home lending.
made available by the FHA's IN
sured mortgage system. is con-
stantly reaching lower and lower
income groups and making home
ownership possible for families
heretofore unable to afford their
own homes.
This gradual tendency to bring
home ownership within easier
reach of low-income groups is at
tributable. Mr.. Mcdonald said,
partly to chronological advances in
reducing the cost of well con-
structed homes and partly 10 the
continued decline In financing
costs.
Amendments to the National
Housing act in 1888 reduce
charges permitted on FHA-insured
mortgages, he pointed out, and
since then lending institutions all
over the country have been cutting
interest rates still further. He ex-
planned that the maximum interest
rate permitted by law on FLA
insured mortgages Is 5 per cent,
plus one-half of l per cent mort
gage-insurance premium. but that
a number of institutions are now
charging less. The amendments OF
1888 also extended the amortiza-
ton period to rs years from 20
years on new owner occupied
homes where the mortgage does
not exceed $4,000. meaning a con-
siderable drop in the monthly pay
ment.
The lowest possible monthly cost
of any home-financing plan is OBJ
tainable under the FILA, Mr.. Nc
Donald emphasized. when the
maximum provisions OF the FLA
plan are obtained, the monthly cost
averages s5.9s per thousand when
the mortgage-insurance premium
is one-fourth of l per cent, and
500 per thousand when the insur-
snce premium is one-half Of ! per
cent. This is the average monthly
cost for interest. reduction of prin-
cipal, and insurance premium; IL
is slightly higher the first years
and slightly lower the last years
over the 25-year amortization
period.
S?9.1a Monthly Payment
Under the FILA plan, Mr.. Nc
Donald said. the average payment
on homes financed in 1888 Is s2972
per month, compared with S32.43
in 1887 and with S3209 in 1885.
On 1888 new homes the average
payment is S3006, compared with
1888 on new homes financed in
1887 and with S3744 in 1886. The
average monthly payment on exist
ing construction is somewhat less.
Nearly 81 per cent of all families
which financed homes under the
FILA plan in 1888 are paying less
than $50 a month, the number be-
ing 500 per cent in the case of new
homes and 642 per cent for exist
ing homes.
The average payment in rela-
ton to income is only 11.5 per cent
in the case of homes financed in
1888 with FHA-insured mortgages,
the average being 1872 per cent for
new homes and 1913 per cent for
existing homes. The average is
1913 per cent on homes financed in
1887 and 12.4 per cent in 1896.
Nearly 81 per cent of ali families
financing homes in 1888 under this
plan are paying less than 20 per