The Federal Housing Administration recently announced that it will make significant price cuts to its Streamline Refinance Program – benefiting millions of American borrowers.
Starting in June 2012, FHA acting commissioner Carol Galante says the agency's Upfront Mortgage Insurance Premium will be reduced to just 0.01 percent, while the annual premium will be lowered to .55 percent.
"This is one way that FHA can make a real difference to help homeowners who are doing the right thing, paying their bills on time and want to take advantage of today's low interest rates," Galante said. "By significantly reducing costs for these borrowers, we can make certain they cut their monthly mortgage burden which will benefit the housing market and the broader economy in the process."
In order to qualify for the price cuts, borrowers are required to be current on the existing loan payments of their FHA-backed loan. In addition, the mortgage must have been backed by the agency prior to June 2009.
It's believed there are currently more than 3.4 million homeowners with FHA-backed loans paying annual interest rates higher than 5 percent. Refinancing into a more affordable mortgage loan rate could offer significant savings. The FHA noted that borrowers who capitalize on lower rates, while incorporating these new price cuts, could save an estimated $3,000 a year.
The reduced premiums is part of President Barack Obama's plan to implement more legislation to help struggling homeowners reduce their mortgage costs.
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