FHA Loan Articles
News, updates, and explanations to keep you informed.
FHA Up Front Mortgage Insurance Premiums (UFMIP)
A commonly asked question about upcoming FHA mortgage insurance premium changes goes something like this:
"I've been looking into applying for a FHA Streamline Refinance.Please let me know if I am understanding this correctly? I currently have a FHA loan that I obtained in March 2009. If I wait till after 06/11/12 to apply for the FHA Streamline Refinance, then I would fall into the category that my PMI rate will lower? Please tell me I'm understanding this correctly, as that would be great."
June 11, 2012 is the date FHA Up Front Mortgage Insurance Premiums (UFMIP) will be lowered for some borrowers applying for FHA Streamline Refinance Loans. An FHA Mortgagee Letter 12-4 explains the changes, which affect some--but not all--FHA streamline refinancing loans:
"For all S(ingle) F(amily) Forward Streamline Refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009, the UFMIP will decrease from 1 percent to 0.01 percent of the base loan amount. "
Basically, those borrowers who have an FHA home loan for a single-family property that was endorsed on or before May 31, 2009 are eligible for a lower rate on their Up Front Mortgage
Insurance Premiums. It's important to note that this rule applies only to those with an FHA Streamline refinancing loan with a case number assigned on or after June 11, 2012 .
The same mortgagee letter contains another announcement; "Decrease to Annual Mortgage Insurance Premium on Certain Streamline Refinance Transactions". In this message, the FHA states, "For all S(ingle) F(amily) Forward Streamline Refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 basis points, regardless of the base loan amount."
As stated previously, these announcements affect those applying for FHA guaranteed Streamline Refinancing Loans where the borrower's original loan was endorsed on or before May 31, 2009) and with case numbers assigned on or after June 11, 2012.
Home Equity Conversion Loans and Title I loans are not included in these changes.
Some borrowers ask about this issue in conjunction with interest rate lock-ins and other details. It's important to remember that the FHA does not regulate interest rates or set them in any way except to state that such rates must be reasonable and customary according to the housing market in that area. Borrowers should expect to negotiate interest rates with the lender and/or comparison shop for the best rates and terms.
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