FHA just announced very significant changes in the FHA single family program. FHA is reducing the up-front mortgage insurance premium (MIP) from 2.25% to 1.5%. The up-front MIP can still be be financed into the loan amount with little or no cost to the homebuyer at closing.
Just as important FHA will now automatically eliminate the monthly MIP when the loan reaches 78% of the orignial value of the home. Although homeowners may not get new appraisals to demonstrate the loan to value for purposes of eliminating MIP, (as with conventional loans see "Canceling PMI") this is still a major reduction in the long term cost of home ownership for thousands of homeowners.
The changes to the MIP structure are scheduled to go into effect for loans closing on or after after January 1, 2001.
The changes in the MIP stucture coupled with the reduced downpayment requirements and the more liberal qualifying guidelines makes the FHA program very competitive against the new Fannie Mae and Freddie Mac 3% down programs. For more information please give us as call!
