You may have heard the mortgage insurance premiums on FHA loans were recently reduced. Unfortunately, they are not going down on existing loans, but that doesn’t mean that you cannot benefit from this new FHA policy.
If you purchased a home using an FHA loan after April 2011, you are paying between 1.20% and 1.35% of your loan amount in mortgage insurance premiums. Effective January 26, 2015, the mortgage insurance premiums on NEW FHA loans was reduced to .85%. This reduction will not apply to existing loans. To take advantage of the new rate, you will need to refinance.
This new FHA policy, coupled with the fact that interest rates on home loans have slipped below 4% again, could make this an excellent opportunity for you to refinance and lower your monthly mortgage payment. For instance, if you are currently paying 4% on a $200,000 mortgage with 1.35% mortgage insurance premiums, you are likely to save more than $100 per month by refinancing with a new FHA loan with a 3.75% interest rate and .85% mortgage insurance premium.
The best way to confirm whether or not you could save money is to call the person with whom you worked to get your current loan. If you’d like to compare pricing, one of our brokers can give you the names of other reputable loan officers who will happily quote you their rates.
To be clear, Just For Buyers Realty and its brokers have no financial stake in your decision either way. We do not receive any sort of incentive from any lending institution. The people we recommend are those who have a track record of delivering outstanding service and value to our past and present clients. This notice is just to give you a heads up so you can check out whether or not you would benefit from refinancing.
If you have any questions regarding the changes made to mortgage insurance premiums on FHA loans, please contact Just For Buyers Realty at 910-202-4813 or info@JustForBuyersRealty.com.