According to the press 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. This action 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.”
As President Barack Obama pointed out in one speech, the amount saved thanks to the FHA’s MIP cut could be used, in some cases, to make a mortgage payment and get ahead on the home loan. Others may choose to save the money for other uses, but the approximated $900 in savings (according to the FHA) is definitely a plus.
“This action will make homeownership more affordable for over two million Americans in the next three years,” said U.S. Department of Housing and Urban Development Secretary Julián Castro, who was quoted in the press release. “Since 2009, the Obama Administration has taken bold steps to reduce risks in the mortgage market and to protect consumers. These efforts have made it possible to take this prudent measure while also ensuring FHA remains on a positive financial trajectory. By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures.”
The FHA MIP cut takes effect today, January 26, 2014 for all FHA loans with case numbers assigned on or after this date. For a limited time, the FHA will permit cancellation of previously issued case numbers, “with 30 days of this mortgagee letter”, referring to Mortgagee Letter 2015-01, which was issued on January 9th, 2014. The full text of the exception section of that letter reads:
“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 about how to accomplish this if you are eligible for a re-assigned case number.
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