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FHA Lowers MIP 2017 -Should every FHA borrower Refi?

FHA Lowers MIP 2017-Should every FHA borrower Refi?

 

@Patty Blackwelder of Lorton, VA left this comment on my FHA Lowered the Mortgage Insurance-So What? post.

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?

 

It depends.  For many, there will be a nice savings using a streamline refinance.  It is important for folks to do a regular review of their mortgage loan to ensure they are in the right loan for their current situation.

 

There have been so many changes to FHA over the years each borrower's situation might be different.  

 

Take for example, the changes to the 30 year fixed rate loan since 2008:

  • Prior to January 2008 : 0.50% annual MIP plus 1.50% upfront MIP
  • October 2008 : 0.55% annual MIP plus 1.75% upfront MIP
  • April 2010 : 0.55% annual MIP plus 2.25% upfront MIP
  • October 2010 : 0.90% annual MIP plus 1.00% upfront MIP
  • April 2011 : 1.15% annual MIP plus 1.00% upfront MIP
  • April 2012 : 1.25% annual MIP plus 1.75% upfront MIP
  • April 2013  : 1.35% annual MIP plus 1.75% upfront MIP
  • January 2015 : 0.85% annual MIP plus 1.75% upfront MIP
  • January 2017:  .60% annual MIP plus 1.75% upfront MIP

Crazy, right?

 

FHA requires that the mortgage insurance is paid both up front (UFMIP) and monthly.  The UFMIP is financed into the loan. For 30 year loans with less than 10% equity, the monthly premium must be paid for the life of the loan. If the loan to value (LTV) is 90% or less, the premium will be paid for 11 years. 11 years!

 

Here are just a few things to consider for a refinance:

  • How soon will I breakeven on the cost of the refinance?
  • Has my situation changed?  Is my credit better?  My debt lower?  
  • Do I need to take cash out?
  • How long will I be in the home?
  • What is my current MIP and how would a new loan affect that payment?  Is the premium almost ready to drop off?
  • Has the value of my home increased?  
  • Would it make sense to refinance into a conventional loan?
  • Am I resetting my loan to a 30 year loan (which will account for some of the decrease in payment, if extending the loan term) or would a different term make more sense?

As with any purchase or refinance, it is important to look at the borrower's specific situation, loans are NOT one size fits all and there are lots of things to consider.  Talk to a great loan officer to discuss your situation.  If you are in Maryland, my brother Tony and I will be happy to review yours!

 

MONEY SAVING TIP!

*If you are refinancing an FHA loan, be sure to confirm the date that the loan being paid off was originated.  If your loan originated before Jan 21, 2015, your servicer can include the entire month's interest in the pay off.  If after Jan 21, 2015, the lender can only include interest earned, paid per day until the loan is paid in full.   This means that when your loan that was originated before Jan 21, 2015 closes early in the month, you are paying double interest-the full month on the old loan and interest from the day of closing through the end of the month on the new loan.   To save money, ask your lender about settling 4-5 days before the end of the month so there is only a few days of overlap. 

 

FHA Lowers MIP 2017-Should every FHA borrower Refi?

 

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 19 2017 03:27AM

Comments

Latest news is that the Trump/Carson, new HUD secretary plan to freeze this, and probably roll this back.

Here's the link.

http://www.nationalmortgagenews.com/news/compliance-regulation/trump-team-said-to-plan-delay-of-fha-premium-cut-1095116-1.html?utm_campaign=alert-c-jan%2018%202017

Posted by Mike Wald (Mike Wald, Scottsdale, AZ, mortgage consultant, 480-241-2632) 7 months ago

Our marKet has a pretty huge USDA approved geo area , so FHA isn't doing as well !

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