FHA (Federal Housing Administration) announced this week its plan to lower mortgage insurance premiums, a day after President Obama unveiled the effort to kick start first time buyer home purchases. This is wonderful news for Florida first time buyers in 2015. For 30-year mortgages with less than a 5 %, the mandatory annual mortgage insurance rate of 1.35 percent of the loan balance will be cut to 0.85 percent. For FHA-insured loans with more than a 5 percent down payment, the previous 1.30 percent rate will be reduced to 0.80 percent. The chart to the left shows how much an average borrower with a $200,000 mortgage will save over the life of their loan.
But the reduced rates will not apply to borrowers with 15-year mortgages, according to a letter issued to mortgage lenders by FHA. The insurance rates on that loan product, which range from 0.45 percent to 0.95 percent of the loan balance, remain the same. The lower insurance rates on 30-year mortgages will take effect 1/26/2015. FHA said it will temporarily allow FHA purchase loan and refinancing applications now in process and that have a case number but have not closed to be canceled. Then, borrowers can restart the process and get new case numbers assigned on or after Jan. 26. We encouraged Florida borrowers to contact us to review their options.
Below is the new mortgage insurance chart as of Jan 26, 2015 –
Homeowners that have existing FHA home loans are encouraged to contact us to discuss FHA streamline refinance options. Refinancing may make sense for many Florida homeowners stuck with the FHA higher 1.35% mortgage insurance over the last few years. Lower mortgage insurance combined with near historic low rates could mean huge savings on monthly mortgage payments.
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FHA Mortgage Insurance MI Going Down 2015