January 14, 2015
A reader asks, “I just got an FHA loan last May. Do I qualify for a reduction when it happens?”
This question comes in reference to our previous blog post discussing the FHA announcement that annual FHA mortgage insurance premiums would be reduced in 2015, amounting to a savings as much as approximately $900 per year (according to a speech by President Barack Obama). Our post, “FHA Announces Mortgage Premium Cut” included the following details on the new FHA policy:
“An FHA/HUD press release (HUDNo. 15-001) announced the change, which could take effect as early as the end of the month. According to the release, ‘As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration (FHA) will reduce the annual premiums new borrowers will pay by half of a percent.'”
“Half a percent may not sound like a lot to some, but according to the FHA official site, that half-percent reduction ‘is projected to save more than two million FHA homeowners an average of $900 annually and spur 250,000 new homebuyers to purchase their first home over the next three years.'”
The answer to the reader’s question can be found in FHA/HUD Mortgagee Letter 2015-01, which states, “This ML is effective for case numbers assigned on or after January 26, 2015.” For an FHA mortgage loan that closed in May 2014, the reduced MIP would not apply.
However, FHA loan rules do permit some transactions to have their FHA loan case numbers cancelled and reassigned in order to take advantage of the new MIP structure. What FHA loans are eligible for this procedure? According to the FHA, “To allow mortgagees to obtain the reduced annual MIP rates contained in this ML for loans in process with active FHA Case Numbers, FHA will temporarily approve cancellation requests for active FHA Case Numbers within 30 days of the effective date of this ML.”
Speak to your loan officer to learn how this might be accomplished.
Do you have questions about FHA home loans? Ask us in the comments section. You can also follow us on Facebook.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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