What FHA Loans are Eligible for Lower Mortgage Insurance Premiums?
Here’s one variation on the common questions we’re getting about this change to the FHA home loan program:
“I just got an FHA loan last May. Do I qualify for an MIP reduction when it happens?”
This is in reference to the January 2015 FHA announcement stating that annual FHA mortgage insurance premiums would be reduced, amounting to a savings as much as $900 per year according to a speech by President Barack Obama. The President was quoted by U.S. News and World Report as saying, “ I want to talk about helping more families afford their piece of the American dream, and that is owning their own home...Buying a home’s always been about more than owning a roof and four walls. It’s about investing in savings and building a family and planting roots in a community.”
HUDNo. 15-001 announced the change, which could take effect as early as the end of the month. According to the release, ‘As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration (FHA) will reduce the annual premiums new borrowers will pay by half of a percent.’”
“Half a percent may not sound like a lot to some, but according to the FHA official site, that half-percent reduction ‘is projected to save more than two million FHA homeowners an average of $900 annually and spur 250,000 new homebuyers to purchase their first home over the next three years.’”
FHA Mortgagee Letter 2015-01, explains what FHA mortgage loans are affected by the changes in MIP rates., “This ML is effective for case numbers assigned on or after January 26, 2015.” For an FHA mortgage loan that closed in May 2014, the reduced MIP would not apply.
However, some transactions could be eligible to have FHA loan case numbers cancelled and reassigned in order to take advantage of the new MIP structure. What does the FHA mortgagee letter have to say about this temporary measure?
“To allow mortgagees to obtain the reduced annual MIP rates contained in this ML for loans in process with active FHA Case Numbers, FHA will temporarily approve cancellation requests for active FHA Case Numbers within 30 days of the effective date of this ML.”
Speak to your loan officer to learn more or to see if your FHA loan is eligible.
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