FHA Mortgage Insurance Reduced January 27
HUD has announced that as of January 27, 2017, all FHA loans will be subject to a reduced PMI rate, saving home buyers and home owners potentially thousands of dollars over current rates.
For those with FHA loans set to close prior to 1/27, it would be wise to hold off if possible to take advantage of the reduced rates, as the changes will be effective for all loans closed with funds disbursed on or after January 27, but loans closed in the interim are subject to current rates.
Why they don't make these changes effective immediately is beyond me as it is sure to cause frustration for folks using FHA with closing dates between today & January 27, and there is of course still the down side to FHA mortgage insurance remaining present for the life of the FHA loan, but all in all, this is a very positive industry change, and reflects that the FHA insurance fund has reached a capacity reflective of a market with few defaults.
With loan amounts for Conventional & FHA loans increasing for 2017, and now mortgage insurance for FHA loans being reduced, indicators point to our nations housing & mortgage market being nearly fully recovered from the 2008 collapse.
Most 30 year FHA products will see a 25 basis point reduction and 15 year products set for a 20 basis point decrease, as reflected in the chart below. In dollars, this represents a $500/year savings for someone with a $200,000 loan amount.
For all those looking forward to a wonderful 2017 in the real estate and mortgage markets, this is welcome assistance to offset the recent increases in interest rates, especially since FHA is a product used by many first time buyers.
If you have any questions on the FHA changes or how it impacts your loan process, feel free to give me a call at 484.680.4852.