FHA Streamline Refinance Mortgages will get a boost on Monday for FHA Mortgages that were endorsed on or before May 31st, 2009. This MIP update will mark the 5th time in 4 years FHA has changed its MIP schedule.
The New Annual Mortgage Insurance Premium (MIP) will be 55bps regardless of the base loan amount for eligible FHA Streamlines. This comes as welcome news in that a large number of FHA borrowers were unable to refinance, or realized minimal benefit, when refinancing to FHA’s current MIP (in some cases exceeding 125bps) even with a dramatic decrease in interest rates from 2009.
Additionally, there will be a decrease in the Upfront Mortgage Insurance Premium (UFMIP) on eligible FHA streamlines endorsed on or before May 31st, 2009. As of June 11st, 2012 the Upfront Mortgage Insurance Premium will decrease from 1% to .01%.
As it stands today, new FHA applicants may pay up to 1.25% per year for annual mortgage insurance plus 175 basis points at closing for upfront MIP. The “grandfathered” FHA applicants will pay just 0.55% per year for mortgage insurance and 1 basis point at closing.
Assuming an FHA loan size of $200,000, the savings are huge:
· New FHA applicant : $208 per month for annual MIP; $3,500 due at closing for upfront MIP.
· Pre-June 2009 FHA applicant : $92 per month for annual MIP; $20 due at closing for upfront MIP.
Take advantage of today’s historical low interest rates, and lock in an amazingly low mortgage rate and start saving today!