In this episode of Seattle Real Estate Chat, Jim Reppond and I discuss FHA’s HAWK program with special guest, Frances Flynn Thorsen.
Just to review all the mortgage insurance deductions I cover in the video:
Currently FHA has an upfront mortgage insurance premium of 1.75% and annual mortgage insurance of 1.35% based on a minimum down payment.
With the HAWK program, qualified home buyers will have the upfront mortgage insurance premium reduced by 50 basis points to 1.25%. The annual mortgage insurance premium will be reduced by 10 basis points to 1.25%.
Should the home buyer complete post-closing housing counseling and make their mortgage payments on time , they will receive an additional permanent reduction of 15 basis points on the annual mortgage insurance effective on their 25th mortgage payment to 1.10%.
For example, if a home buyer has a $400,000 loan amount, the upfront mortgage insurance premium is currently $7,000 ($400,000 x 1.75%). With FHA’s HAWK program, the upfront mortgage insurance premium would be $5,400. This is a savings of $1,600. And since a majority of borrowers with FHA mortgages elect to finance the upfront mortgage insurance, the savings is greater over the life of the loan.
With the annual mortgage insurance, based on a loan amount of $400,000 with a minimum down payment, the monthly mortgage insurance premium is $450 ($400,000 x 1.35%=$5,400 / 12 months). With FHA’s HAWK program, the monthly MI payment would be $416.67, providing a monthly savings of $33.33. And if the home owner wants to further reduce their mortgage payment by attending post-closing counseling and making their payments on time, their MI payment will reduce to $366.67.
I’ve written more about FHA’s HAWK program here.
If you are interested in buying or refinancing a home anywhere in Washington state, I’m happy to help you! Click here if you would like me to provide you with a mortgage rate quote.
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