Recent FHA Announcement Will Save Borrowers Thousands With A Michigan FHA Streamline Refinance

This past week, President Obama announced that the annual mortgage insurance premium on FHA insured loans would be reduced by nearly 40%. This creates the opportunity for borrowers with existing FHA loans to save on their monthly mortgage payments by refinancing with an FHA Streamline.

In the wake of the nation’s housing crisis, FHA increased its premium prices to stabilize the health of its Mutual Mortgage Insurance Fund (MMIF). These actions began in July of 2008 and affected both the upfront Mortgage Insurance Premium (MIP) as well as the annual MIP on FHA loans. These incremental changes to MIP have resulted in Michigan borrowers paying higher premiums to obtain FHA financing.

As the nation’s housing market continues to improve, so has the economic health of FHA’s MMIF. A recent report by FHA to Congress demonstrates that the agency’s single-family insurance fund continues to improve, adding a substantial $21 billion in value over the past two years.

This positive report spurred the Obama administration to announce last week that FHA will be reducing it’s annual MIP from 1.35% to0.85% which is a 50 basis point reduction. This reduction will significantly expand access to credit for many Michigan families and is expected to lower the cost of housing for approximately 800,000households nationwide who use FHA annually. This means more Michigan residents will be able to use FHA financing to either purchase a home or refinance their existing FHA loan using the Michigan FHA streamline refinance program.

“This action will make home ownership more affordable for thousands of Michigan families almost immediately,” said Jason Nolan, President of Michigan Mortgage Solutions. “Since July of 2008, the Obama Administration has taken bold steps to protect consumers and reduce risks in the mortgage market. These continued efforts have allowed HUD and FHA to take this prudent measure while at the same time ensuring FHA remains financially sound. By reducing these premiums, more Michigan residents will be able to purchase homes and those with existing FHA loans will be able to take advantage of significant savings.”

For example, if a Michigan borrower took out an FHA loan in January of 2014, the interest rate would have been around 4.125% and the annual MIP would have been 1.35% of the amount financed. Using a $150,000 loan amount this would have resulted in a principal and interest payment of approximately $727 with a monthly FHA MIP of $169.Without including taxes and homeowners insurance the payment would be $896.

If that same homeowner looked into a Michigan FHA Streamline refinance today, the interest rate would be around 3.75% and the annual MIP would be reduced to 0.85% of the amount financed. Using the same $150,000 loan amount this results in a principal and interest payment of approximately $695with an FHA MIP of $106. Without including taxes and homeowners insurance the same payment is reduced to $801. This saves the borrower $95 per month or$1,140 per year.

“Lower premiums coupled with low FHA rates will almost certainly create a mini refinance boom saving Michigan borrowers thousands of dollars which will help to improve our local economy,” said Nolan.”Plus, the streamline refinance is far less intrusive than that of a purchase transaction making it both easier and faster to get approved.”

Check out this video regarding these recent changes to FHA mortgage insurance;

One of the best parts about Michigan FHA Streamline Refinance is that it does NOT require an appraisal or verification of income.  FHA Streamline loans are almost always structured as “no cost” transactions, where the borrower does not raise the mortgage balance and does not pay any closing costs. With Michigan FHA 30year fixed loans in the mid to high 3’s along with these reduced premiums,borrowers stand to reap some real savings.

About Michigan Mortgage Solutions

Michigan Mortgage Solutions was founded in 1998 and serves the Michigan Real Estate industry. Known best for specializing in FHA Streamline Refinance Programs in Michigan with no closing costs, no appraisal, and incredibly low rates.

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