FHA announced changes to Mortgage Insurance for FHA Streamline Refinances
The newest Mortgagee Letter issued by HUD on 3/6/12 not only addressed the upcoming general changes to mortgage insurance premiums previously accounced in a press released, but also included changes on the mortgage insurance premiums for certain FHA Strealine Refinances.
In the past, any refinance, whether it was a fully documented refinance or a streamline refinance, was subject to whatever Up Front Mortgage Insurance Premium and Annual Premium factors were in effect at the time the new case number was issued.
In many cases, that mean that taking advantage of the current low rates was nearly impossible since the FHA mortgage insurance premiums have increased considerably Increased considerably in the past 3 years. That meant that any advantage of having a lower rate would either be complete erased by the higher monthly mortgage insurance figure or at the very least, make it so that the cost of refinancing was too great for the drop in total payment.
Effective with case numbers issued June 11, 2012, anyone utilizing the FHA Streamline Refinance option to refinance a loan endorsed on or before May 31, 2009 will be subject to specific Annual Mortgage Insurance Premiums and Upfront Mortgage Insurance Premiums.
FHA streamline refinances meeting the criteria for the endorsement deadline and with a new case number on or after June 11, 2012 will have an UFMIP of .01% and an annual MIP of .55 regardless of the base loan amount.
The lender obtaining the new case number will need to confirm the endorsement date of the FHA loan being refinanced as it is not the closing date, but rather the day FHA issued the insurance guarantee on the loan.
The lower mortgage insurance figures will open up refinance possibilities to many homeowners, who up to now, have been unable to take advantage of the low mortgage rates available.