FHA reduces the monthly mortgage insurance (MIP) by over 1/3 effective January 26, 2015!!

FHA lowers PMI drastically which saves buyers money

FHA lowers PMI drastically which saves buyers money

FHA has just made financing the purchase or refinancing of a home cheaper by lowering the amount of monthly payment of mortgage insurance premium by over 1/3!  The latest announcement by HUD states that the monthly mortgage insurance premium on mortgage terms over 15 years will be reduced by .50.  So in English, what does this mean to you as a potential 1st time buyer, repeat buyer, or homeowner looking to refinance?  Lower monthly payments!!!

Historically, FHA has been a program that has more relaxed credit guidelines but recently buyers had to pay a premium to get the loan.  Well this reduction will allow many more prospective home buyers to purchase a home more affordably.  Another thing to think about is if you tried to refinance but the higher MIP ate up the interest rate savings, this lower MIP along with the lower interest rates these days could now make that refinance make sense.

Highlights of this reduction in Mortgage Insurance Premium:

  • Effective for all FHA case numbers assigned on 1/26/15 or after
  • All other rules still apply such as length of time MIP continues.  Click here to see length of MIP
  • Applies only to mortgage terms over 15 years.  So the 10 and 15 year MIP stays the same & are lower than 20 – 30 year MIP
  • If you are already pre-approved for an FHA loan, you can temporarily get released from your current FHA case file ID which has the higher MIP and then after 1/26/15 can get the lower MIP

Example of the lower MIP’s affect on a payment:

Purchase price of $200,000 and borrower putting down the minimum 3.5%.  MIP prior to 1/26/15 = $220.92 per month.  MIP on or after 1/26/15 is $139.10 which saves a whopping $81.82 per month.

Terms > 15 Years

Base loan amount Loan to value Previous MIP New MIP
< $625,500 < 95% 1.30 .80
< $625,500 > 95% 1.35 .85
> $625,500 < 95% 1.50 1.00
> $625,500 > 95% 1.55 1.05

Terms 15 Years or Less

Base loan amount Loan to value Previous MIP  New MIP
< $625,500 < 90% .45 .45
< $625,500 > 90% .70 .70
> $625,500 < 90% .70 .70
> $625,500 > 90% .95 .95

Read the official HUD/FHA mortgagee letter 2015-01 here

FHA loan size limits per county for NC & the rest of the country

To learn if an FHA loan would work for your purchase or refinance, contact our team today!

Team Move lends in areas such as Wilmington, Leland, Hampstead, Jacksonville, Whiteville, Shallotte, Southport, Elizabethtown, Lumberton, Fayetteville, Rockingham, Raleigh, Charlotte, Burgaw, Castle Hayne, Greensboro, Winston-Salem, Holden Beach, Supply, Ocean Isle Beach, Sunset Beach, Hubert, Tabor City, Carolina Beach, Kure Beach, Laurinburg, Topsail Beach, North Topsail Beach, Surf City, Sneads Ferry, Richlands, Wrightsville Beach, New Bern, Oak Island, Saint James, Wallace, as well as the rest of NC.  North Myrtle Beach, Myrtle Beach, Conway, Loris, Little River, Longs, as well as the rest of SC

Author: Russell Smith

Team Move OVM Financial loan officer success is Russell’s primary focus. He provides the tools and techniques he used as a top producing loan officer. Additionally he offers the Team Move OVM Financial Agent Training Program. Sharing is so important to Russell so he works diligently to be a resource to loan originators and Realtors.