FHA announced this morning that it is lowering the annual premium 25 bps. It is effective for loans with a closing or disbursement date on or after January 27th, 2017. By making the change effective for loans closed instead of case numbers assigned, it eliminates a lot of the confusion caused in 2015 when premiums were last reduced.
How does this translate into real dollars?
In most cases 3.5% down payment on a 30yr fixed loan (less than $625,000) the current annual MIP equals 85 basis points of the loan amount (Loan Amount X 0.85%). The new rate equals 60 basis points (Loan Amount X 0.60%).
For example – using the perimeters above, a $200,000 loan currently yields monthly mortgage insurance payment of $141.67. Under the new rate the monthly mortgage insurance payment drops to $100. Generating ~$500 p/yr in savings!
This is HUGE!
Here is a link to the press release: https://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2017/HUDNo_17-003
Here is a link to the Mortgagee Letter: https://portal.hud.gov/hudportal/documents/huddoc?id=17-01ml.pdf