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The new, lower fees will make streamline refinances much more feasible to borrowers, Conarchy says.
When the new fees take effect, a borrower refinancing $200,000 will pay $20 -- instead of $3,500 -- in upfront mortgage insurance. The borrower also will pay about $92 -- instead of $208 -- per month for annual mortgage insurance.
That's because the FHA reduced the upfront mortgage insurance premium for eligible homeowners to 0.01 percent of the total loan and the annual premium to 0.55 percent of the loan. For borrowers who are not eligible for the reduced fees under the streamline program, the cost of upfront mortgage insurance is 1.75 percent of the total loan and 1.25 percent of the loan per year.
"We could have a mini-refinance boom in June" after the fees are reduced, says Derek Egeberg, a branch manager at Academy Mortgage in Yuma, Ariz.
To qualify for the reduced fees on streamline refinances, the borrower must:
-- Have a mortgage already insured by the FHA.
-- Be current on the mortgage.
-- Have a mortgage that was endorsed by the FHA before June 2009.