November 25, 2017

Have You Heard the Great News?‏

The Federal Housing Administration will be lowering the monthly Mortgage Insurance Premiums by half a percentage point, from 1.35% to .85!
This could make for another refinance boom, and save homeowners a lot of money in 2015 and beyond. Combined with the fact that FHA rates are back down to historical lows that we haven’t seen in 3 years, the monthly savings alone, on an average California loan size would be quite significant!
The FHA’s reduced annual mortgage insurance premiums (MIP) will take effect for all forward mortgages on Jan. 26, according to implementing guidelines issued by the agency.
The lower MIP will apply to most single-family mortgages with amortization terms greater than 15 years. The new mortgage letter includes a table showing the current and new annual MIP rates by amortization term, base loan amount and loan-to-value ratio.
President Obama announced the premium cut during a housing policy speech last week in Phoenix. The goal is to get more creditworthy borrowers with little or no cash to qualify for an FHA mortgage.
In addition, the FHA will approve temporarily cancellation requests for loans with FHA case numbers assigned, but not yet closed, to allow lenders to obtain the reduced annual MIP rates.
Lenders may start requesting case number cancellations on Jan. 15, but must submit all requests before midnight on Feb. 26, 2015. Lenders should not order new case numbers until they have confirmed that the previous case number has been cancelled, the agency advised.
For borrowers who have recently closed an FHA loan which has been funded there will be no immediate recourse. They will have to wait the mandatory 210 day period and have made six payments on their existing FHA loan before refinancing through a streamline loan in order to secure the lower MIP.
To reiterate, the reduced premiums will be unavailable on loans with terms of 15 years or less (the annual MIP for those loans is already less than the new MIP amounts for 30yr loans). Also, The reductions DO NOT apply to streamline refinancing of existing FHA loans that were endorsed on or before May 31, 2009 (these also have lower MIP already–.55–so no major slap in the face here). The new MIP will not be available either for Section 247 loans which are specific to the Hawaiian Homelands.

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