September 28, 2016
Here’s a version of a common question we’ve been asked recently about FHA mortgage insurance premiums: “I closed an FHA mortgage on a house I purchased in December 2014. The following month FHA reduced the mortgage insurance premium (MIP). Can I get the lower mortgage insurance rate and a reduced monthly payment without totally refinancing my mortgage?”
The FHA/HUD official site published a .pdf file that addresses this question directly. Back in 2015 the FHA lowered it’s mortgage insurance premium. The pdf states, “The reduction is effective as of January 26, 2015. Borrowers with case numbers assigned on and after January 26, 2015 will be eligible for reduced annual mortgage insurance premiums.”
Note the specific date when the lower premiums become effective-borrowers who have loans prior to these dates will be required to pay the FHA MIP described in the loan paperwork the borrower signed.
Other portions of the FHA MIP FAQ found on the FHA official site include answering questions such as, “What steps do I need to take to take advantage of these new lower premiums?” The FAQ instructs those eligible for the MIP reduction to “…contact an FHA-approved lender for information regarding FHAs new annual mortgage insurance premiums.”
Another question that was deemed important at the time of this document’s writing was, “What will the impact of FHAs new premiums be on my monthly mortgage costs?” The lower MIP now required by FHA loans means that, “Future borrowers who qualify for FHAs new reduced annual premiums will enjoy the benefits of a more affordable FHA loan with lower costs. HUD estimates these lower premiums will save more than two million FHA homeowners an average of $900 annually and spur 250,000 new homebuyers to purchase their first home over the next three years…”
The reader question above fits into a certain category of borrower affected by the following statement in the FHA MIP FAQ. The question, “I’ve had a FHA mortgage for years. Can I take advantage of these new lower premiums?” The FHA’s answer to this question:
“FHAs premium reduction takes effect for mortgages with case numbers assigned on or after January 26, 2015, and does not affect loans that have already closed. If you have closed your loan, you are not eligible for FHAs new premiums.” A quick re-reading of the reader question shows that the borrower in this case did NOT have the FHA loan “for years”. However, the FHA FAQ does address the following question, also:
“I just closed on my mortgage. What should I do?”
The answer? “FHAs premium reduction takes effect for mortgages with case numbers assigned on or after January 26, 2015, and does not affect loans that have already closed. If you have closed your loan, you are not eligible for FHAs new premiums.”
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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