On Thursday, October 27, Mike Anderson, the vice president for the NAMB participated in a White House Meeting with Secretary Donovan from the Department of Housing and Urban Development and Jon Carson, Director of the Office of Public Engagement, for a conference call about the American Jobs Act/Project Rebuild and this week's Housing Refinance Announcement.
NAMB discussed allowing FHA refinance transactions to allow for the old MI (mortgage insurance) rate in order for consumers to take advantage of the low interest rates. NAMB emphasized how the new MIP (mortgage insurance premium) makes the refinance possibility out of touch for most homeowners.
What's the significance of this? Over the past few years the mortgage insurance premium FHA charges has increased from .55% to 1.15% annually. So let's say a person has an interest rate of 5.25% and they potentially could refinance into an interest rate of 4.25%. Obviously there will be a savings there. However if they have the old MI rate of .55% they would have to take on the new MI rate of 1.15% which in turn off sets the interest rate savings.
The bottom line is that if this goes through some day it will allow even more people in an FHA loan to take advantage of today's extremely low interest rates and not increase the mortgage insurance amount paid. Another positive step in moving the real estate recovery forward.
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