FHA Lowers Mortgage Insurance Premiums for Home Refinancings

by SARAH BARRON

The Federal Housing Administration will lower mortgage insurance premiums for borrowers who refinance their loans as part of President Barack Obama’s plan to improve the housing market.

The FHA will reduce up-front premiums to 0.01 percent of total loan amount from 1 percent under the plan announced by Obama today during a news conference at the White House. Annual fees will be cut to 0.55 percent from 1.15 percent for borrowers with FHA loans made before June 1, 2009, according to a fact sheet distributed by the Obama administration.

“I’m not one of those people who thinks we should just sit by and wait for the housing market to hit bottom,” Obama said. “There are real things we can do right now,” he said, noting that the changes don’t require congressional approval.

The fee cuts, which take effect April 9, are part of an Obama administration effort to spur the economy by helping homeowners take advantage of historically low mortgage interest rates. The changes could increase the reach of FHA’s streamlined refinance program by 3.4 million households paying interest rates higher than 5 percent, the FHA said. A typical borrower would save about $1,000 a year, the agency said.

The streamlined refinance program is available to borrowers with FHA-insured loans who are current on their payments even if they owe more than their homes are worth. The program doesn’t require verification of income and employment, and it doesn’t mandate a new appraisal of the property.

From Clea Benson, ©2012 Bloomberg News, Tuesday, March 6, 2012

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