The Federal Housing Administration (FHA/ HUD) announced some good news for new homebuyers and existing homeowners that have a FHA mortgage. Basically for the first time since 2001, the FHA is lowering its monthly mortgage insurance premiums (PMI) costs for Florida and Georgia homeowners. Starting Jan 26th, the reduced mortgage insurance costs will kick in. Ok so what exactly does this mean? First a little background –
All the government backed mortgage programs today ( VA, FHA mortgage and USDA Rural mortgage) all require a one-time upfront mortgage insurance costs known as a Funding fee or in the case of USDA, known as a Guarantee fee. In addition to this one time upfront fee, the FHA and USDA program also require monthly fee added each month to borrowers mortgage payments – this fee is known as Mortgage Insurance Premium (MIP) or PMI, or in the case of USDA “annual fee”. VA is the only program that does not require the monthly mortgage insurance costs. Call it what you will, but the upfront and monthly fees are charged by the agency to make the programs taxpayer neutral, all homebuyers pay this fee when obtaining their government backed mortgage.
One issue with the FHA program in recent years is the ever rising monthly MIP – this fee has been increasing a lot! Below you can see the chart of recent mortgage insurance factors from 2007 to 2015:
- Before January 2008 : 0.50% monthly MIP plus 1.50% upfront MIP
- October 2008 : Increase 0.55% monthly MIP plus 1.75% upfront MIP
- April 2010 : Increased 0.55% monthly MIP plus 2.25% upfront MIP
- October 2010 : Increased 0.90% monthly MIP plus 1.00% upfront MIP
- April 2011 : Increased 1.15% monthly MIP plus 1.00% upfront MIP
- April 2012 : Increased 1.25% monthly MIP plus 1.75% upfront MIP
- April 2013 : Increased 1.35% monthly MIP plus 1.75% upfront MIP
- Current 2015 : REDUCED to 0.85% monthly MIP plus 1.75% upfront MIP
Obviously this new decrease in FHA’s monthly mortgage insurance costs is going to be great for new homebuyers looking to purchase a home in 2015. Their average costs will be reduced by $75.00 per month. However, this also presents a great opportunity for existing Florida & Georgia FHA mortgage holders that received their FHA loan after April 2012, and especially those after April 2013. The U.S. Department of Housing and Urban Development (HUD) said last week it expects between 100,000 and 200,000 FHA refinances in 2015. Homeowners with loan amounts over $200,000 can save some serious cash each month on their monthly mortgage payments. Over $80 per month just with the reduction of monthly MIP, assuming their interest rate stays the same. Higher loan amount over $250,000 will obviously save much more.
In addition let’s not forget that mortgage interest rates are currently near all time low levels right now. So if a homeowner is going to refinance their FHA loan and take advantage of the reduce mortgage insurance costs, they may very well qualify for a lower interest rate at the same time. Basically when it’s all said and done, their savings could be in the hundreds each month.
It only take about 5 min to see if the FHA streamline refinance with reduced mortgage insurance makes sense for you. New Florida & Georgia homebuyers interested in getting qualified for an FHA loan, or existing homeowners that want to review a refinance are encouraged to visit our friends at www.fhamortgagesource.com or call them Monday-Sunday at ph: 904-302-6060.
FHA Monthly PMI Costs Decreasing – Lakeland, Sarasota, Tallahassee, Jacksonville FL, Orlando, Tampa, Gainesville, Ocala, Daytona Beach, Winter Garden, Clermont, St. Augustine, Spring Hill, Winter Haven, Plant City, Fort Myers, Lake City, Destin, Fort Walton Beach, Pensacola, Kissimmee, Brandon, Naples, Lake City, Port Charlotte, Vero Beach, West Palm Beach, Miami, Port St. Lucie, Riverview, Live Oak, Madison FL, Valdosta, Macon, Savannah, Atlanta, Albany, Tifton, Columbus.