FHA to Cut Mortgage Insurance Premium Amount
January 12, 2017
On Monday, January 9, 2017, the Federal Housing Administration/Department of Housing and Urban Development announced it will reduce the Mortgage Insurance Premium (MIP) on all FHA loans closing after January 27, 2017. After this date, borrowers will pay 25 basis points less for their MIP.
FHA doesn't issue loans, but similar to Fannie Mae and Freddie Mac, they provide backing for lenders who do make loans. MIP is present on all FHA loans, but the rate varies depending on LTV.
FHA's Mutual Mortgage Insurance Fund, which helps the Federal Housing Authority protect against losses due to default, receives the funds from the Mortgage Insurance Premium on FHA loans.
Loans closed After January 27, 2017 will have an MIP reduced by 25 Basis Points.
The Federal Housing Administration made this change in the wake of last month's interest hike by the Fed, in hopes of widening the pool of homebuyers and making FHA a more appealing loan product, in general. This is only the third time in history that FHA has reduced the MIP and will be an integral part in a robust Real Estate Market for 2017 and beyond! This is great news for all FHA buyers!