If you're in the market for a new home or are a current homeowner with an FHA mortgage, we have some great news for you! On February 22, 2023, the Federal Housing Administration (FHA) announced a 30 basis point reduction in the annual premium charged to mortgage borrowers.
This is great news for the mortgage industry as a whole, as it will result in lower mortgage insurance premiums (MIP) for most borrowers, down from 85 to 55 bps. This cut has been long-awaited by the industry.
What is an MIP?
Before we dive into how this news will impact current and future homeowners, let's quickly define what an MIP is. Mortgage insurance premiums (MIP) are insurance policies that protect lenders against losses if a borrower defaults on their mortgage loan. The FHA requires MIP on all FHA mortgages regardless of the size of the down payment.
Remind me... what's an FHA mortgage?
How will this change impact current homeowners?
And what about new home buyers?
It's just one small step in the right direction, but it's a step that's been a long time coming. Here's hoping that more changes like this are on the horizon!