Over the past couple of years, the MIP (mortgage insurance premium) rates on FHA loans have increased, which raised monthly mortgage payments. The increase kept some homebuyers out of the market.
On January 26, FHA will reduce its MIP rate and allow borrowers to save on average $900 a year.
- Annual premium reduced from 1.35% to .85%
- No change to the upfront premium (1.75%) or life of the loan requirement
- Applies to all FHA loans (including purchase and refinance)
The government estimates the lower MIP rate will allow:
- 800,000 homeowners to refinance in 2015
- 250,000 new people to become homebuyers over the next three years
More on the story here.
The positive MIP news comes just after Fannie Mae and Freddie Mac announced a 3% down payment program for first-time homebuyers. All the changes may encourage more people to consider buying a home.
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