FHA Mortgage Insurance Premiums to Be Lowered
Lower FHA Mortgage Insurance Premiums to Save Buyers $900 Per Year
FHA Mortgage Insurance Premiums Being Lowered
Beginning in late January 2015, home buyers using government-backed loans to buy a house would benefit by lower fha mortgage insurance premiums on 30 year loans. Currently PMI mortgage insurance rates on 30-year loans stand at.
- 30-year loan terms with loan-to-value over 95%: 1.35 percent annual MIP
- 30-year loan terms with loan-to-value under 95%: 1.30 percent annual MIP
The plan being enacted by the Federal Housing Administration will reduce its annual mortgage insurance premiums on 30-year loans by 0.5 percentage points.
Effective late January 2015 Mortgage Insurance Premiums (MIP) on 30-year loans will be.
- 30-year loan terms with loan-to-value over 95%: .85 percent annual MIP
- 30-year loan terms with loan-to-value under 95%: .80 percent annual MIP
Note – The Upfront Mortgage Insurance Premium (UFMIP) under the FHA’s new plan for 2015 will remain at 1.35%. The UFMIP is paid at the time of closing and is traditionally rolled into the buyer’s mortgage.
Potential Savings
The FHA estimates the reduction will save new home buyers about $900 to $1200 a year. The program to lower FHA mortgage insurance fees should have a favorable, although modest, impact on home sales to first time home buyers.
Present homeowners refinance into an FHA mortgage that required FHA mortgage insurance would also benefit from the change. Although the rate will be lowed, the rate for PMI mortgage insurance is still higher than historical rates.
The rate was initially increased to raise FHA capital reserves that were hart hit during the housing crisis. Could the FHA mortgage insurance rate go lower? Hopefully it will as capital reserves of FHA meet the levels required for the future.
The PMI mortgage insurance reduction, appears to be another step to get more homes sold in the U.S.
Conclusion
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