More than a third of homeowners who financed their purchase with a Federal Housing Administration (FHA) loan could save money by refinancing, as reported by the Urban Institute. An analysis of this finding highlights that a recent cut to FHA mortgage insurance premiums would make refinancing a cost-saving measure for 2.4 million current home owners with FHA mortgages.
With the current low mortgage rates, the option to refinance has become a cost-saving solution for many homeowners. The FHA mortgage insurance premium drop could even make an FHA mortgage a more attractive option for a person looking to refinance a conventional mortgage. The research team came to that total by taking the pool of existing FHA loans, about 6.6 million – and removing about 2.2 million with characteristics that make unable or less than ideal for refinancing. Those groups include loans originated prior to June 1, 2009 (which are eligible for FHA’s lower-rate Streamlined Refinance program); delinquent and modified loans; and mortgages with terms of 15 years or less, for which the premium cut does not apply.
In general, borrowers stand to save money by refinancing if the new mortgage rate and the new FHA premiums, combined, result in a 0.75% reduction or more in annual mortgage costs, according to the Urban Institute.
We are seeing many of our clients save substantial amounts by refinancing. If you want more information on this topic or if you would like to speak with a lender please email us at firstname.lastname@example.org