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FHA Insurance Premiums Drop

FHA Insurance Premiums Drop

FHA Insurance Rate Cut Helps Offset Some Recent Interest Rate Hikes

FHA’s annual mortgage insurance premiums are being reduced by .25% for most new borrowers who are closing on their FHA insured loan on or after January 27, 2017. This reduction will offset some of the recent interest rate increases that we have seen happening since November of 2016.

The savings from the lower FHA mortgage insurance premiums are very good. Here is a chart illustrating approximately how much FHA borrowers will save if they choose an FHA loan of >= 20 years in length:

Loan Amt Down Payment Previous MIP New MIP Estimated Savings per $100K
< $625,000 < 5% .85% .60% $250
< $625,000 > 5% .80% .55% $250
< $625,000 < 5% 1.05% .60% $450
< $625,000 > 5% 1.00% .55% $450

FHA homeowners with an FHA loan already would have to refinance to take advantage of these cuts in the cost of the mortgage insurance.

The reason we are seeing this reduction is because of the strong, U.S. housing market. Home prices have been moving higher for about five years now, which is part of why cuts like this are possible.

Also worth noting is that additional cuts to the FHA upfront insurance premium (currently at 1.75%) could be on the horizon. The upfront premium was as low as 1.00% in 2010 and 2011, so future cuts are possible. Our country’s continued economic recovery and strength in the housing market will play a big part in determining if this happens.

Should you have any questions regarding a new FHA loan, or if you’re just looking for trusted mortgage advice regarding your next home loan, CONTACT US directly for a complimentary consultation. We’re here to help!

On your team,

Eric

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© 2017 Eric Leigh. All rights reserved.