Earlier this month, President Obama announced his intention to lower annual mortgage insurance premiums on FHA loans by 50 basis points, or .5%. Today, this lower mortgage insurance premium on FHA loans goes into effect.

 

This reduction will now be applied to FHA loans with a term greater than 15 years. For borrowers whose FHA loan closed prior to today, January 26, 2015, the mandatory cooling period of 210 days and six mortgage payments must be honored before he or she is eligible to refinance and secure the new premium.

 

What does this mean? The lower annual mortgage insurance premium on FHA loans will make homeownership more affordable for many people in the nation. Making homeownership a reality could help boost the economy and the state of the housing industry. Those with an existing FHA loan may be eligible to refinance and secure the lower premium allowing them to also save more on their monthly payment. The potential to save more money monthly varies for each unique situation, but many experts are confident the change could significantly boost consumer confidence in and stability of the market.