As of January 26, premiums on a loan from the Federal Housing Administration could be cheaper.
The Federal Housing Administration has now released the details of its intentions to lower the premiums on mortgage insurance, in an announcement that followed closely on the heels of the unveiling of President Barack Obama’s intentions to give the first time home purchasing market a boost.
There will be considerable reductions in the insurance rates that will be charged on FHA-insured loans.
For instance, when it comes to 30 year mortgages that have been taken out with a down payment of under 5 percent, the mandatory annual mortgage insurance rate that had previously been 1.35 percent will drop to 0.85 percent as of January 26. For those FHA-insured loans that have been taken out with a down payment that is greater than 5 percent, the current rate of 1.30 percent will be dropping to 0.80 percent.
That said, the reduced mortgage insurance rates will not affect individuals with 15 year loans.
A letter that the federal government has now issued to lenders has specifically pointed out that borrowers who have taken out home loans for 15 year terms will not be affected by this change in the insurance rates. Those rates are currently within the range of 0.45 percent and 0.95 percent of the balance of the loan, and they will be remaining the same as of January 26.
The FHA will, on a temporary basis, be able to purchase loan and refinancing applications that are currently in process and that have already assigned a case number, but that have not been closed to be cancelled. The borrowers will then have the opportunity to begin the process once more, providing new case numbers that have been assigned on January 26 or afterward.
Home loan borrowers are being encouraged to speak with their lenders with regards to this change in mortgage insurance rates, so that they will be able to better understand the changes that are being made, and to give them the chance to look into the various options that are available to them and choose the one that is best for them.