FHA Reduces Mortgage Insurance First Time In Two Years, Then Cancels The Reduction
UPDATE: Not long after President Trump took office, the announcement was made that the reduction in the MIP would be suspended indefinitely until further study could be done to determine the potential impact.
For the first time in two years, the Federal Housing Administration (FHA) has announced that it will be lowering it's annual mortgage insurance premiums.
U.S. Housing and Urban Development Secretary Julián Castro said on Monday the FHA will reduce the annual premiums most borrowers will pay by a quarter of a percent, or 25 basis points, for most new mortgages with a closing or disbursement date on or after January 27th of 2017. The new rates are projected to save new FHA-insured homeowners an average of $500 this year, Castro said.
The secretary said consumers are facing higher credit costs as mortgage interest rates increase. "After four straight years of growth and with sufficient reserves on hand to meet future claims, it's time for FHA to pass along some modest savings to working families," said Castro. "This is a fiscally responsible measure to price our mortgage insurance in a way that protects our insurance fund while preserving the dream of homeownership for credit-qualified borrowers."
The new rates come as the FHA enters a fourth straight year of improved economic health, the administration said. The FHA gained $44 billion in value since 2012.
"We've carefully weighed the risks associated with lower premiums with our historic mission to provide safe and sustainable mortgage financing to responsible homebuyers. Homeownership is the way most middle class Americans build wealth and achieve financial security for themselves and their families," Ed Golding, principal deputy assistant secretary for HUD's Office of Housing, said in the report.
Homeowners with an existing FHA loan that haven't refinanced in the past two years may be able to reduce their payment. If you would like to try to take advantage of these new lower premiums by applying for an FHA Streamline Refinance, talk to the Snider Mortgage Team or find an FHA Approved Lender near you.