There’s good news for those with an FHA loan here in Florida, FHA Streamline refinance fees have decreased. First and foremost, interest rates are at all time lows never seen before. Second, the fees required for FHA refinance loans has dropped, making it even more beneficial to refinance your FHA loan. These benefits apply to any owner occupied FHA loan whether you live in Jacksonville, Orlando, Tampa, West Palm Beach….anywhere in the Sunshine State!
The fee that’s been reduced actually applies to two different fees that are used to help fund FHAs guarantee programs. Every FHA loan has an insurance policy that is issued when the loan is made. This insurance policy is placed in the instance of a borrower default on the mortgage and the home has to be foreclosed upon. If a lender makes an FHA loan and approves the loan under standard FHA lending guidelines, the lender is reimbursed by FHA should the loan go bad.
The reimbursed lender is paid back with funds from FHA’s insurance fund. This fund is called the Mortgage Insurance Premium and is funded by a premium that is paid upfront at loan closing (the Upfront Mortgage Insurance Premium, or UFMIP) as well as a monthly insurance premium. The upfront premium is typically rolled into the loan amount although the borrower may choose to pay the premium out of pocket at the closing table. Both the upfront as well as the monthly premiums have been reduced in order to encourage refinancing and reduce the closing costs for an FHA refinance.
Just how much? Say you got an FHA loan today for a new purchase in Jacksonville that sold for $300,000. The upfront mortgage insurance premium is calculated at 1.75 percent of the loan amount. If you put the minimum 3.5% down on your $300,000 home, your loan amount would be $289,500 meaning your UFMIP would be $5,250 and your monthly mortgage insurance payment would be 1.25% percent of the loan amount about $312 per month added to your mortgage payment.
Now, for all FHA loans that were made prior to June 1, 2009 those premiums are drastically reduced for an FHA refinance. The upfront premium drops from 1.75 percent all the way down to .01 percent! The premium for this special refinance program drops from $3,618 all the way down to $36! In addition, the monthly premium drops from 1.25% percent to .55 percent. This comes out to a savings on hundreds per month.
The reduction in these two fees alone for an FHA refinance on your Florida home results in literally thousands of dollars in savings. There are special guidelines for this program but if you have an FHA loan now and it was made prior to June 1, 2009 then thousands of dollars in savings just might be waiting for you. No equity, no problem.
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Florida home owners with conventional home loans can learn more about the HARP 2 refinance program here