Housing and Urban Development, the Government entity that oversees the FHA home loan program, just announced great news for FHA home loans, as FHA mortgage insurance is getting cheaper.
Starting on January 26, 2015, the annual mortgage insurance for new FHA mortgages will decrease by .5% for all new FHA mortgages with a term of greater than 15 years (15 year fixed mi rates remain the same).
Essentially the big changes affect those with a lower down payment, who take out a 30 year fixed loan.
If you take out a new FHA loan and put down a 5% or less than down payment, then previously you would have paid a 1.35% FHA mortgage insurance annual fee, added to each of your monthly payments. However, with the new changes, that number will drop to a .85% FHA mortgage insurance annual fee.
In addition, if you put more than 5% down on a 30 year fixed FHA loan, the previous annual mortgage insurance fee on an FHA loan was 1.3% and will be dropping to .8% annually, split evenly into your monthly payments.
The .5% reduction in mortgage insurance is something that can definitely save money for many of those looking into a new FHA to purchase a home, as it makes the loan program even more affordable for new buyers.
In addition, for those who currently have an FHA loan they took out in the past few years and especially in the last twelve months, the new FHA program could look to add significant savings to the homeowners, if they were to refinance into a new FHA loan with lower mortgage insurance.
For example, on a $200,000 home mortgage loan, if the homeowner were able to reduce their annual mortgage insurance from 1.35% to .85%, but keep their interest rate the same, then the savings for that alone would be $1,000 per year.
Therefore, if you have a current FHA loan, then you may want to look into an FHA streamline refinance to lower your mortgage insurance. The program is easier to complete and eliminates much of the paperwork and fees you will find on a standard refinance.
As always, we will keep you updated with any further changes. However, if you are looking to purchase a home or refinance your home, using an FHA mortgage, make sure to always seek out a licensed mortgage professional such as Strategic Mortgage.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
Strategic Mortgage, LLC – AZBK#0909514 – NMLS#158804
Vasilios Bill Kamboukos – NMLS#160440 – Equal Housing Lender
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