The Federal Housing Administration (FHA), a government insurer of home loans, cut 50 basis points (0.50%) from the annual premium for FHA backed loans with terms greater than 15 years. For most FHA loans this will reduce the annual premium from 1.35 percent of the loan balance to 0.85 percent for case numbers assigned on or after January 26, 2015.
This Mortgagee Letter includes a table which shows the current and new annual MIP rates by amortization term, base loan amount, and loan-to-value ratio.
For the typical FHA applicant, the reduction in premiums means a savings of about $80 on their monthly payment, according to CoreLogic’s chief economist, Sam Khater.
FHA will temporarily approve case number cancellation requests for loans with FHA Case Numbers assigned but not yet closed to all mortgagees to obtain the reduced annual MIP rates. Mortgagees may begin submitting individual case number cancellation requests under this temporary authority beginning January 15th, 2015 and ending by 11:59 p.m., ET, February 26, 2015.