The reduction in FHA mortgage Insurance has been (at least) temporarily paused before ever actually going into effect.
The FHA mortgage insurance rate reduction came as a giant unanticipated surprise to all of us in the mortgage world. I guess I should have figured something was up, as it appears the reduction was part of Washington’s political games.
The outgoing Obama administration people made the surprise reduction announcement with only days remaining in office. As soon as the Trump administration was sworn in, they immediately put the reduction on hold, stating it was irresponsible, and needed to be evaluated. This allowed the former administration to run around claiming how horrible the new administration was. Errr….
Personally, I think it is a bunch of crap that these people play with home owners, the mortgage industry, and the real estate industry, regardless of what side of the political fence you stand.
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Minneapolis, MN: HUD/FHA has announced that the required monthly FHA mortgage insurance costs are dropping with any new FHA loan closing January 27, 2017 and after.
For most FHA home buyers, this will mean a drop from .85% monthly, to just .60% monthly.
On a $200,000 loan, that means a monthly savings of $41.00 a month!
Combine the new lower FHA mortgage insurance, with the fact that FHA interest rates roughly 1/2% LOWER than conforming loans, and it is no wonder our FHA loans are so popular!
How to calculate FHA monthly mortgage insurance:
Take the loan amount times the insurance factor, then divide by 12
Example: Loan amount X .0060 / 12 = $ Monthly MI
$200,000 X .0060 / 12 = $100 a month
Learn About Your Streamline Refinance Mortgage Options
Homeowners enjoy the benefits of investing in their property year after year. For some, there comes a time when that investment can come in handy. Refinancing with an FHA loan can prove to be an effective way to put that equity to work. Keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence.
FHA options to homeowners who are considering an FHA refinance mortgage:
This refinancing option is especially beneficial to homeowners whose property has increased in market value since the home was purchased. A Cash Out refinance allows homeowners to refinance their existing mortgage by taking out another mortgage for more than they currently owe.
This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.
FHA Up Front Mortgage Insurance Premiums (UFMIP)
FHA has recently made changes to the required mortgage insurance. June 11, 2012 is the date FHA Up Front Mortgage Insurance Premiums (UFMIP) will be lowered for some borrowers applying for FHA Streamline Refinance Loans. An FHA Mortgagee Letter 12-4 explains the changes, which affect some, but not al, FHA streamline refinancing loans:
For all FHA Streamline Refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009, the UFMIP will decrease from 1.75 percent to just 0.01 percent of the base loan amount.
Basically, those borrowers who have an FHA home loan for a single-family property that was endorsed on or before May 31, 2009 are eligible for a lower rate on their Up Front Mortgage Insurance Premiums. It’s important to note that this rule applies only to those with an FHA Streamline refinancing loan with a case number assigned on or after June 11, 2012.
The same mortgagee letter contains another announcement; “Decrease to Annual Mortgage Insurance Premium on Certain Streamline Refinance Transactions”. In this message, the FHA states, “For all Single Family Forward Streamline Refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 basis points, regardless of the base loan amount.”
One other item. It’s important to remember that the FHA does not regulate FHA interest rates or FHA streamline interest rates or set them in any way, except to state that such rates must be reasonable and customary according to the housing market in that area. Borrowers should expect to negotiate interest rates with the lender and/or comparison shop for the best rates and terms.
We are an FHA, VA, and USDA Loan Approved Lender. While we offer these loans, we are not acting on behalf of, or under the direction of The Department of Veteran Affairs, HUD, FHA, The department of Agriculture, or the Federal Government. FHA (HUD) does not lend directly to the public, but only through approved lenders like us here at Mortgages Unlimited. We are proud to help families buy or refinance their homes with FHA loans located in Minnesota, Wisconsin, and South Dakota.