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FHA Streamline Refinances and FHA MI changes for 2013

Savings fly away

The changes coming to FHA annual MIP (monthly mortgage insurance) for 2013 will not affect some FHA Streamline Refinances.

Capture the savingsHUD announced in Mortgagee Letter 2013-04 that changes will be coming to the amount of monthly mortgage insurance on FHA loans as well as the duration of the mortgage insurance.

Fortunately, the changes to the monthly mortgage insurance terms will not affect FHA Streamline Refinances that were endorsed on or before May 31, 2009.

Homeowners who have an FHA mortgage that was endorsed on or before May 31, 2009 will continue to benefit from the much lower upfront mortgage insurance premium as well as the annual MIP (monthly mortgage insurance)

Refinances falling under this categories have an upfront mortgage insurance premium (UFMIP) of .01% as compared to the current 1.75% that applies to most purchase and refinance transactions.  The annual MIP or monthly mortgage insurance for these loans will be .5%.

Comparing the monthly MIP for this categories of FHA Streamline Refinances to current levels is a bit more complicated due to the upcoming changes.

 

The table below shows both the current and new annual MIP rates for purchases and refinances other than streamline refinances endorsed on or before May 31, 2009.  All New Rates are effective for case numbers assigned on or after April 1, 2013

FHA MIP 2013

 

 

 

 

 

 

In addition, the monthly mortgage insurance for streamline refinances on pre-May 2009 will continue to be eligible for removal once 60 payments have been made AND the loan to value is at 78% or lower.

The chart below shows the upcoming changes to the minimum duration of monthly mortgage insurance on all loans with case number assignments on or after June 3, 2013

FHI MIP 2013

June 3, 2013 will also bring changes to the monthly mortgage insurance for 15 year loans with loan to value equal to or less than 78%.  Currently, 15 year loans with 20% down did not have monthly mortgage insurance, that will be changing as well.

Those that are not eligible for the lower FHA MI percentages should explore the possibility of a conventional loan for the refinancing of their home.

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