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Millions Of FHA Homeowners Eligible To Remove FHA MIP

By Dan Green

Black Knight data shows a drop-off in rate-and-term refinance opportunities, but there are vast numbers of homeowners eligible to remove their FHA MIP with a conventional mortgage refinance; Today’s mortgage rates and 5-day trends for conforming, FHA, VA, USDA, and jumbo and niche loans; and, how the Freddie Mac Primary Mortgage Market Survey serves everyone and nobody all at the same time.

Homeowners Refinance Into Rising Mortgage Rates

Black Knight Refinance-Ready Households - Growella
Since 2016, refinance-ready households drop 75%

Fewer U.S. households are now “in the money” to refinance.

According to Black Knight’s Mortgage Monitor Report, a look at mortgage and housing data published monthly, the number of refinance-eligible households nationwide dropped to 2.29 million last month.

The drop-off represents a 75 percent reduction from just two years ago when mortgage rates were lower, and home values were only beginning to pop.

There are fewer homes eligible for refinancing today than during any time in the last 10 years and mortgage lenders have taken notice.

They’re also going on the offensive.

Today, it’s hard to open up a screen, listen to a show, or leaf through your mail without seeing an advertisement to refinance your home. And, the ads are promoting specific types of refinance activity — none of which is sensitive to rising mortgage rates.

The most obvious refinance opportunity, however, is the refinance of an existing FHA loan into a loan of a different type, which cancels FHA mortgage insurance forever.

U.S. home values are up twenty percent or more as compared to earlier this decade. Today’s FHA-backed homeowners now have sufficient home equity to refinance into a conventional.

It’s an effective way to cancel FHA MIP because, without a refinance, FHA MIP lasts forever, adding as much as 1.35 percentage points to your locked-in mortgage rate.

FHA mortgage insurance turns a 5.00 percent rate into an effective interest rate of 6.35 percent, adding thousands of dollars in mortgage insurance expenses every calendar year.

So, if your current home loan is FHA-backed, make contact with a lender today. Get comparison quotes on how an FHA-to-conventional loan refinance might work.

Even with mortgage rates up, dropping MIP can be a winning, long-term move.

Today’s Mortgage Rates & Interest Rate Trends

Today's Mortgage Rates and the 5-day mortgage rate trend - Growella
5-day mortgage rate trend

Mortgage rates are falling.

As compared to earlier this week, 30-year fixed rate mortgage rates are down; and, so are 15-year fixed rate loans, 5-year ARMs, and jumbo loans.

Mortgage rates remain near 7-year highs despite this week’s reversal.

Here’s what happening in mortgage rates today:

The actual rate quote you get from a lender will vary based on about a dozen loan traits including loan size, property type, and credit score.

Your choice in loan programs makes a difference, too. USDA and VA mortgage rates are often lowest as compared to other loan types; and, FHA rates are currently highest.

Talk to a mortgage lender for a live mortgage rate quote and always comparison shop between two or more lenders. Statistics show that getting a second mortgage rate quote can save you $2,000 on your home loan.

Get Today’s Mortgage Rates

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The Published Mortgage Rate That Nobody Gets

Nobody gets the Freddie Mac-advertised rate - Growella
Nobody gets the Freddie Mac-advertised mortgage rate

Government-backed mortgage group Freddie Mac publishes its Primary Mortgage Market Survey (PMMS) each Thursday.

The report, which lists the average current mortgage rates for 30-year fixed rate mortgages, the 15-year fixed-rate mortgages, and 5-year ARMs, has been published weekly since 1971.

Freddie Mac mortgage rates are widely-used by economists, statisticians, and policy-makers — but don’t expect to get access to them as a consumer.

Because Freddie Mac mortgage rates aren’t “real.”

The interest rates listed in the Freddie Mac PMMS are composites, based on data from more than 100 U.S. lenders. Also, they use a specific borrower scenario that’s probably different from yours.

The rates shown by Freddie Mac assume all of the following:

The Freddie Mac rates apply to these loan traits only. They also assume that you’re going to live in the home you purchase; that you’re closing in 30 days; and, that you’re opting to pay a small number of discount points.

These is a significant set of assumptions, and almost nobody fits the Freddie Mac profile — especially first-time home buyers who are considered low-down payment mortgages such as HomeReady® and HomePossible® which both allow for 3% down.

Mortgage rates are not one-size-fits-all. For accurate quotes on a loan, getting with a mortgage lender, either online or in-person, is imperative.

Click here to connect with a mortgage lender now.

Written by Dan Green

Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.

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