MIP Reduction Expands Credit Access for Homebuyers
Big news out of the Federal Housing Administration this week. Effective for mortgages with close/disbursement dates on or after Jan. 27, 2017, the FHA has reduced the Annual Mortgage Insurance Premiums (MIP).
For borrowers: It essentially reduces the annual premiums they will pay by a quarter (1/4) of a percent. U.S. Housing and Urban Development Secretary, Julián Castro said that these new rates will save new FHA-insured home owners an average of $500 in 2017.
“After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” Castro said.
For realtors: This reduction will make it easier to help credit-worthy buyers get the loans they need by expanding their access to mortgage credit. This move will help many borrowers who are typically passed over by conventional lenders, including first-time buyers and low-income buyers.
Here’s the press release from HUD on the MIP reduction. For more information and a full schedule of the new premium rates, read the FHA’s mortgagee letter. And check out our weekly Realtor Update to see what some of the industry experts are saying about this decision.