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FHA Changes for Homeowners

June 13, 2012

FHA loans have adopted new changes to their pricing structure and underwriting, making refinancing very favorable for homeowners.  Here are the details you need to know.

FHA Streamline Refinances Become More Affordable

On June 11th – today – changes to the mortgage insurance premiums make it easier and less expensive to refinance an existing FHA loan with an endorsement date of May 31, 2009 or earlier.

The Upfront Mortgage Insurance Premium (MIP), which is usually added to the total mortgage amount, will drop from 1.750% of the loan amount to 0.01%. On a $100K loan that is $1,750 vs. $10 now for the Upfront MIP.  That’s big savings!

The annual premium will be reduced to 0.55% of the loan amount and divided over 12 months and added to the monthly payment.

For those with FHA loans with a later endorsement date, the MIP premiums remain the same.

Just as important, many traditional underwriting guidelines are relaxed in an FHA Streamline refinance. There’s no income or employment verification, and no appraisal required, which means that even underwater homeowners can apply for an FHA streamline.

Bottom line:  The lowered cost of refinancing and the ease of underwriting should make it easier for certain FHA loan holders to reduce their interest rate and their monthly payments.

Considering the changes put into place over the last several months, FHA mortgages continue to be an excellent option for many homeowners.  Working with a lender that is experienced in FHA loans is critical to moving the process along smoothly.

For details on specific situations or questions about marketing FHA loans to your customers, contact your loan officer today!

From Sandie Tate

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