How the FHA's Annual MIP Decrease Will Save You Money
This is great news for homeowners and buyers with FHA loans.
If you're a homeowner or planning to purchase a home soon, then you might be interested in the latest news from the Federal Housing Administration (FHA). They have recently announced a significant decrease in the annual mortgage insurance premium, and this could mean significant savings for homeowners.
What exactly is the FHA annual mortgage insurance premium, and why is this announcement such a big deal? When you take out an FHA loan, you're required to pay an annual mortgage insurance premium (MIP). This insurance protects the lender in case the borrower defaults on the loan. The amount you pay depends on several factors, including the size of your loan and your credit score.
"You may be able to secure a better deal if you act now."
Before the recent announcement, the annual MIP was set at 0.85% of the loan amount. However, the FHA has now reduced this rate to 0.55%. You might think that this is a small difference, but it can add up to significant savings over time.
Let's say you're taking out a $500,000 loan. Under the old rate, you would have paid an annual MIP of $4,250 ($500,000 x 0.85%). But with the new rate, your annual MIP would be $2,750 ($500,000 x 0.55%). That's a savings of $1,500 per year, or $125 per month. This money could be used to pay down your mortgage faster, make home improvements, or simply boost your savings.
If you're currently paying an FHA MIP or planning to take out an FHA loan, then this is excellent news for you. The FHA has stated that this change will take effect on new FHA loans that are issued on or after January 26, 2015. If you have an existing FHA loan, then you may be able to refinance and take advantage of the lower rate.
This change will help you save money on your monthly mortgage payments, and it could have a significant impact on your long-term financial goals. If you're interested in learning more about this announcement or need help with your FHA loan, don't hesitate to contact us by phone or email. We're here to help.