FHA to Reduce Premiums for Certain Loans

Through a streamline refinance program, borrowers with FHA-endorsed loans may find it easier to lock in lower interest rates while paying less in fees.

Beginning June 11, 2012, FHA will lower upfront mortgage insurance premiums to .01 percent and reduce annual premiums to .55 percent for certain FHA borrowers, Carol Galante, acting FHA commissioner, announced today.

To be eligible, borrowers must to be current on their FHA-insured loans, which need to have been endorsed on or before May 31, 2009.

“This is one way that FHA can make a real difference to help homeowners who are doing the right thing, paying their bills on time and want to take advantage of today’s low interest rates,” said Galante. “By significantly reducing costs for these borrowers, we can make certain they cut their monthly mortgage burden which will benefit the housing market and the broader economy in the process.”

Currently, 3.4 million mortgages endorsed on or before May 31, 2009 pay more than a five percent in interest. The average FHA-insured borrower is estimated to save approximately $3,000 a year or $250 per month.

The streamlined process may also allow many borrowers to refinance without requiring additional underwriting. FHA-insured homeowners should contact their existing lender to determine eligibility.

Late last month, the FHA also announced plans to increase upfront and annual premiums on most other loans insured by FHA beginning in April to raise capital. Upfront premiums will increase to 1.75 percent from 1 percent, and annual premiums will increase 10 basis points and 35 basis points on mortgages higher than $625,500.

FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.

Advertisements

About SanDiegoatHomeTeam
Christian van't Vlie and Ivana Milosevic. Helping sellers and buyers successfully reach their real estate goals while keeping them informed every step of the way, disclosing all known facts and real estate practice procedures so that all involved parties can make well-informed decision. We care and we are at your service.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: