FHA STREAMLINE REFINANCE SAVINGS

FHA Commissioner Carol Galante announced significant price cuts to the FHA Streamline Refinance Program that could benefit millions of borrowers whose mortgages are currently insured by FHA. Currently, 3.4 million households with loans endorsed on or before June 1, 2009 pay more than a five percent annual interest rate on their FHA-insured mortgages.


If your existing FHA mortgage was endorsed prior to June 1 2009, your mortgage insurance premiums have been “grandfathered”. You can refinance to an FHA Streamline Refinance program and pay reduced rates for both upfront MIP and annual MIP. To qualify, borrowers must be current on their existing FHA-insured mortgage which were endorsed on or before June 1, 2009.


Beginning for FHA case numbers assigned on or after June 11, 2012 and for loans endorsed prior to June 1, 2009, the new FHA upfront mortgage insurance is equal to 0.01 percent, or 1 basis point . So for example if your FHA refinance is for a new $100,000 mortgage, the FHA will assess a $1 upfront mortgage insurance premium (MIP ) to be paid by you at closing. The FHA automatically rolls the $1 payment into your new loan balance. This is a huge discount over the FHA’s standard UFMIP payment of 1.75% beginning April 9.


Meanwhile for FHA Case Numbers assigned on or after June 11, 2012 and for loans endorsed prior to June 1, 2009 costs for the other type of FHA mortgage insurance-annual MIP moves to a standard 55 basis points. Currently the standard annual MIP is as high as 120 bps starting April 9, 2012. Example on a new $100,000 mortgage the Annual premium or monthly MI would be $46 vs $104. This is a savings of over 65%.


"This is one way that FHA can make a real difference to help homeowners who are doing the right thing, paying their bills on time and want to take advantage of today's low interest rates," said Galante. " By significantly reducing costs for these borrowers, we can make certain they cut their monthly mortgage burden which will benefit the housing market and the broader economy in the process."

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