2015 FHA Mortgage Insurance Changes
We rang in 2015 this month, but in the real estate world this year was dubbed “Year of the First Time Homebuyer” before any of us ever attended a New Year’s party or tuned into New Year’s Rockin’ Eve to see Taylor Swift “Shake it Off”. What the real estate world has shaken off is the fall of 2008… and we’ve recovered nicely.
The thing about being the Year of the “First Time Homebuyer” is that if the changes to the FHA Mortgage Insurance Premium or MIP is any indicator, it’s most definitely true. The FHA morgage insurance changes that have taken effect, January 26th, 2015 save first time homebuyers entering into FHA loans a ton on their MIP.
What is mortgage insurance?
Mortgage insurance is an insurance to protect lenders against default by the borrower and is required on mortgages with less than a 20% downpayment. The borrower pays the insurance, often in monthly installments though sometimes as a lump sum. Since new programs are allowing a lower percentage down, many first time buyers are having their first experience with this kind of insurance.
What do the FHA mortgage insurance changes mean for you?
It has been announced that 30 year (15 years won’t see a change) FHA mortgage loans will have a lower MIP and the reduction will take the current rate of 1.35% to .85%. This is a reduction of .5% for the buyer’s mortgage insurance payment.
This reduction will save the typical homebuyer with an FHA mortgage in the United States around $900 annually. Of course, price varies on the home price, so to find out how much you could save, consult your mortgage professional. Need a resource? Contact me anytime for mortgage help and all Florence real estate
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