Thursday , 21 January 2021

Loan Officer Perspective on FHA’s Mortgage Insurance Change

By Ted Rood

Posted To: Community Commentary

Last week, President Obama and HUD announced a reduction in the mortgage insurance premium (MIP) fees charged on FHA loans. Most FHA borrowers, both current and future, stand to benefit from the lower fees. Here’s a loan officer’s perspective on the impact: FHA loans had officially become the last resort for my buyers. Between the large upfront MIP (mortgage insurance premium) of 1.75%, the onerous annual MIP cost of 1.35%, and the fact that MIP now lasts for the life of the loan, the only borrowers I recommended FHA to were those unable to qualify for a Fannie or Freddie loan. It wasn’t surprising that FHA loan volume had fallen off dramatically, in fact, it was predictable . Whether it’s weirdly coincidental or purely reactive, HUD’s decision to lower annual MIP costs by .5% comes as Fannie…(read more)

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