FHA Loans Are About To Get Better!

FHA lowers PMI ratesAt the end of the January, the FHA (Federal Housing Administration) will be LOWERING mortgage insurance premiums for the first time in years. The reason? Significant loses forced the FHA to borrow money from the US Treasury, but they have now recovered and have a multi-billion dollar surplus. This is the result of better performing loans and a rise in home values.

Current PMI (Private Mortgage Insurance) for 30-year mortgages with less than a 5 percent down payment is 1.35% of the loan balance. This mandatory annual mortgage insurance rate will be cut to 0.85% starting January 26, 2015. For an example on a $300,000 loan, this will save homeowners about $1500/year in insurance payments! This new lower rate applies to both new home purchases, as well as those refinancing.

If you took out an FHA loan while MIP rates were at all-time highs, it would be a great time to consider refinancing. For those who currently have an FHA loan and have at least 3% home equity, you can reduce your MIP with an FHA refinance loan. If you have more than 5% home equity, refinancing into a conventional loan can help reduce your payments significantly. In addition, mortgage rates continue to hoover around the 4% level.

If you would like to save money on your monthly mortgage payments or have been thinking of purchasing a new home, now is the time to take advantage of low FHA rates.


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