Starting with FHA loans with case numbers assigned April 18, 2011, the FHA annual mortgage insurance premium will increase. At the time of this writing, no increases in the FHA Up Front Mortgage Insurance Premium are planned, but new borrowers will have the annual mortgage insurance calculated with an additional 25 “basis points”.
· In an effort to make homeownership more accessible and sustainable, President Obama announced the Federal Housing Administration (FHA) will reduce annual mortgage insurance premiums (MIP) by 0.5 percentage points. On a $175,000 home loan with less than 5 percent down, this MIP reduction will equate to a savings of $818 per year or $3,932 over five years.
Reduction of Federal Housing administration (fha) annual mortgage insurance and Temporary Case Cancellation Authority Purpose This Mortgagee letter (ml) communicates revised annual mip rates for FHA Title II forward mortgages and provides opportunity for cancellation of existing case numbers in order to utilize the MIP rates contained in the ML.
FHA mortgage insurance explained FHA loans are backed by the Federal Housing Administration, which is a subsidiary of the federal Department of Housing and Urban Development (HUD). Because FHA-approved lenders take on more risk – due to the lower credit score and down payment requirements – the FHA imposes mortgage insurance premiums (MIP) on borrowers.
Under the Obama administration plan, the FHA would have cut the annual mortgage insurance premiums most borrowers pay by one-quarter of a percentage point, or 25 basis points. The cut was due to take.
Unfortunately, for those who made the minimum FHA down payment of 3.5%, paying for mortgage insurance for the life of the loan is a necessary service charge for taking out an FHA mortgage. To remove insurance entirely, the best course of action if you made a low down payment is to pay the insurance fees until 20% equity is reached, and then consider refinancing into a conventional mortgage.
*No Revision to the time period for Assessing Annual MIP For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP, which is the time on which you will pay for FHA Mortgage Insurance Premiums on your FHA loan.