What is MIP and what does it mean to the consumer?
MIP stands for Mortgage Insurance Premium, and if you are paying it, you probably aren’t a fan.
Good news though, for the first time in two years, the Federal Housing Administration (FHA) has decided to reduce the premiums to offset rising home loan rates. With the reduction, they are hoping to expand homeownership and save money for existing borrowers. The MIP will be reduced by 25 basis points for most new mortgages with a closing or disbursement date on or after January 27, 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,” HUD Secretary Julián Castro said.
“This is a fiscally responsible measure to price our mortgage insurance in a way that protects our insurance fund while preserving the dream of homeownership for credit-qualified borrowers,” he said.
The National Association of Realtors has been advocating for a reduction in the premiums, arguing that lower costs for borrowers should breathe new life into the program.
“FHA mortgage products exist to serve an important mission: providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional lenders,” said NAR President William Brown, a real estate agent from Alamo, Calif.
“The high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time and lower-income borrowers. Now, we have a real opportunity to get back on track,” Brown said.
With FHA’s new lower mortgage insurance premium, now may be the time to refinance to realize a monthly savings for you and your family.
As they always say, “Better in your pocket”.
The United Faith Mortgage Team