23 Jan FHA Mortgage Insurance Premium Changes
You may have heard a lot in the news about recent changes that have been announced to the Federal Housing Administration FHA loan programs and have wondered – How does this affect me? Read below to find out!
The FHA has drastically reduced the annual mortgage insurance premium MIP that it charges borrowers monthly from 1.35% to 0.85% of the loan amount. The purpose of this reduction is that it will allow borrowers to keep more money in their pocket to put toward other liabilities, save for their future, or in many cases – purchase their first home. Many in the industry had felt for a long time that the amount the FHA charged for the MIP was too high and therefore was constricting home ownership across the country. These new requirements could allow as many as 250,000 new home purchasers to enter the market in the next 3 years – and you could be one of them!
Consider the example below:
Under the current FHA program requirements:
If you currently have a $200,000.00 loan amount – your current mortgage insurance premium MIP calculated at 1.35 annually will cost you $2,700.00/year, which is $225.00/month.
Under the NEW FHA program requirements:
If you were to have the same $200,000.00 dollar loan amount – your new mortgage insurance premium MIP calculated at 0.85 annually will cost you $1,700.00/year, which is $141.67/month.
That adds up to $1,000.00 in yearly savings!!!
To quote the U.S. Department of Housing and urban Development Secretary Julian Castro, “This action will make homeownership more affordable for over two million Americans in the next three years. These efforts have made it possible to take this prudent measure while also ensuring FHA remains on a positive financial trajectory. By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures.”
So what are you waiting for? Take the first step toward achieving your financial goals for 2015 and take advantage of this opportunity to refinance your current mortgage or purchase that home you pass every day on your commute to work or school. Call us today and speak with a passionate, knowledgeable and experienced Loan Officer that will guide you through our simple application process and help you navigate your way toward your new loan program!