In early 2015, the Federal Housing Administration (FHA) will reduce annual mortgage insurance premiums (MIP) from 1.35% to 0.85%. The last time the FHA reduced its mortgage insurance premiums for U.S. homebuyers was back in 2001. Now, 14 years later, it is an excellent time for new homeowners to compare FHA loans as rates are far lower than they have been in recent years.
A mortgage insurance premium reduction of 0.5 percent will be a welcome savings for new home buyers. The example scenario below demonstrates just how significant this recent FHA MIP reduction really is.
Before the FHA Mortgage Insurance Premium Reduction:
$100,000 Loan Amount
Current Annual Mortgage Insurance = 1.35% of Loan Amount
$100,000 X 1.35% = $1,350 (Or $112.50 per Month)
After the FHA Mortgage Insurance Premium Reduction:
$100,000 Loan Amount
New Annual Mortgage Insurance = 0.85% of Loan Amount
$100,000 X 0.85% = $850 (Or $70.83 per Month)
Homebuyers can see the savings of $500 per year on a $100,000 loan amount. With a loan amount of $200,000, the savings double at $1,000 annually.
This change will automatically go into effect with FHA Case numbers that are assigned on or after January 26th, 2015.
The following table shows the existing and the new annual MIP rates by amortization term, base loan amount and Loan to Value (LTV) ratio. All New MIP amounts set forth in this table are effective for case numbers assigned on or after January 26, 2015.
Please see Mortgage Letter 2015-01 by the U.S. Department of Housing and Urban Development for the official notice of this change to FHA MIP rates.
If you are currently in an FHA Mortgage with your Mortgage Insurance Premium of 1.35%, please contact Maple Tree Funding to see if refinancing your home mortgage is right for you. As is evidenced by the example above, there may be big savings in store for first time homebuyers and other individuals eligible for FHA home loans.
Contact Maple Tree Funding for more information regarding the 2015 FHA Mortgage Insurance Changes.
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