FHA lowering Mortgage Insurance – Not Anymore…
HUD previously announced on January 9th, they would lower FHA Mortgage Insurance. Information below for reference.
Shortly after the new President was sworn in on January 20th, the Trump administration halted the MI reduction. Mortgage Insurance will retain their previous premiums per the January 20th, Mortgagee Letter.
FHA lowering Mortgage Insurance saves homeowners $500 a year
FHA announced effective (with closings on or after) January 27, 2017, they would lower their annual mortgage insurance premium (annual MIP) by .25 percent (25 basis points) for most loans (full schedule below). HUD projects the premium decrease will save homeowners an estimated $500 this year*. The savings will be for both new home buyers and also homeowners that refinance.
The premium reduction comes shortly after an announcement of increased FHA Loan Limits, a sign of raising home prices. FHA lowering mortgage insurance premiums helps to offset the costs of rising FHA mortgage rates.
*HUD believes that “Today’s reduction will significantly expand access to mortgage credit for these families and is expected to lower the cost of housing for the approximately 1 million households who are expected to purchase a home or refinance their mortgages using FHA-insured financing in the coming year.”
The Upfront Mortgage Insurance Premium (UFMIP) will stay at 1.75% of the base loan amount per Mortgagee Letter 2017-01.
Is FHA best for you? Compare the low down payment mortgage options to discover the best one for you.