Bridget's Blog

head_left_image

FHA lowered the mortgage insurance-SO WHAT?

FHA lowered the mortgage insurance-SO WHAT?

 

You may have read or heard that FHA has lowered their annual mortgage insurance premium for loans CLOSED after January 29th.  

UPDATE 1/18/2017  The Trump administration is postponing the change and could rescind it, leaving the MIP as it stands. Of course, they could also completely change anything else. Stay tuned! 


What the heck is annual mortgage insurance and what does the change mean in real numbers?

FHA loans have two different mortgage insurance premiums.

 

The first is an up front mortgage insurance premium (UFMIP).  This number has changed over the years but as of this writing, the up front premium is 1.75% of the loan amount. It is a one time cost.  This amount gets financed into the FHA  loan.  This means for every $100K in loan amount, the borrower will finance an additional $1750.  This is a one time fee and that has not changed (at least as of this writing.)

 

The second type is called a Mortgage Insurance Premium (MIP).  This is calculated by multiplying the going MIP factor by the loan amount and dividing that number into 12 monthly payments.   On both 15 and 30 year loans, this is paid for the life of the loan if the original loan amount exceeds 90% of the purchase price/value.  The premium is based on the loan term and loan amount.


OK, So I get all that, but what does it all mean in REAL MONEY?

 

Since the factor is used to calculate how much will be added to the monthly mortgage payment, a reduction in the factor translates to a lower monthly payment.

 

FHA lowered the mortgage insurance which means that borrower's will save money EVERY MONTH!

 

FHA MIP 2017

 

 

This factor is decreasing to .60 from .85 for most FHA borrowers which means a savings of approximately $40 every month on a $200,000 loan. This affects the overall payment like a lower interest rate of more than .25%.

 


This is a welcome change since rates have increased over the last couple months. With the lower MIP factor many buyers will be able to afford what they could when rates were lower or, for current homeowners, make it more beneficial to refinance to an overall lower payment before interest rates rise again.

 

 

 FHA lowered the mortgage insurance-SO WHAT?

 

 

 

 

Warm Regards,

Bridget McGee  Maryland Mortgage Mama  NMLS# 196068  Corridor Mortgage Group.   410-960-2061 EHO   bmcgee@corridormtg.com or marylandmortgagemama@gmail.com

 

If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure! 

If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest.  Please contact me at 410-960-2061.

Comment balloon 3 commentsBridget "Mortgage Mama" McGee • January 11 2017 09:05PM

Comments

This is great information!  So often the focus is strictly on interest rates...  There's definitely more involved in borrowing.  Thanks for the education!

Posted by Brenda Mayette, Getting results w/ knowledge & know-how! (Miranda Real Estate Group, Inc.) almost 2 years ago

Let me ask you can my past clients who have FHA Loan can do a stream line refinance to take advantage of the lower MIP?  If their rate is near what it is now even with the cost of streamline refi they will have a nice savings. Would I be correct in my thinking?

Posted by Patty Blackwelder, Top Producing Realtor-New Home Buyer Specialist (Twins Selling Real Estate) almost 2 years ago

Bridget McGee Love how you answer a question and follow up with another blog post! So gled to see you back in the RAIN!

Posted by Margaret Rome, Baltimore Maryland, Sell Your Home With Margaret Rome ( HomeRome Realty 410-530-2400) almost 2 years ago

Participate