New lower mortgage insurance premiums on government-insured loans vary depending on the loan amount, loan-to-value ratio and transaction type.
The Obama administration this week announced a decision to reduce mortgage insurance premiums on loans insured by the Federal Housing Administration.
According to the administration’s announcement,
annual mortgage insurance premiums on FHA-insured mortgages will be slashed by 50 basis points.
On Friday, the Department of Housing and Urban Development issued Mortgagee Letter 2015-01 with details about the reduction in premiums.
HUD said that the reduced premiums are available on
forward mortgages with case numbers assigned on or after Jan. 26.
However, loans in process that have already have active case numbers assigned can be canceled in order to be eligible for the lower premiums. This must be done within 30 days of today.
Eligible loans are those with loan terms longer than 15 years. Exceptions to this requirement include Section 247 mortgages secured by properties in the Hawaiian Homelands and streamline refinances of single-family loans that were originally endorsed by FHA prior to June 1, 2009.
The new annual premiums on loans that don’t exceed $625,500 with loan-to-value ratios of no more than 95 percent will be 80 BPS. If the LTV ratio is greater than 95 percent, the rate jumps to 85 BPS.
For loans that are greater than $625,500, the premium is 100 BPS if the LTV ratio doesn’t exceed 95 percent and 105 BPS if it does.
On streamline refinances and Section 247 mortgages with loan terms less than or equal to 15 years, annual premiums on loans no greater than $625,000 are 45 BPS if the LTV ratio isn’t higher than 90 percent and 70 BPS if it is. These rates didn’t change.
Streamline refinances and Section 247 mortgages more than $625,000 with that don’t exceed 15 years will have premiums of 70 BPS if the LTV ratio is 90 percent or less and 95 percent if the LTV ratio exceeds 90 percent. These premiums were also unchanged.
