This article was originally published at Mortgage News Daily. Copyright: Mortgage News Daily.

The annual premium paid by borrowers on mortgages backed by the Federal Housing Administration (FHA) is going down by a quarter of a percent.  Housing and Urban Development (HUD) Secretary Julian Castro announced today that the annual mortgage insurance premium (MIP) will be reduced 25 basis points for most new mortgages with a closing date on or after January 27.  The reduction is expected to save new FHA insured homeowners an average of $500 this year.

A HUD press release said today's announcement reflects the fourth straight year that FHA's Mutual Mortgage Insurance Fund (MMIF) has strengthened.  It has gained $44 billion in value since 2012 and last year alone grew by $3.8 billion.  The fund now stands at 2.32 percent of all FHA insurance in force, the second consecutive year that it has exceeded the 2 percent capital reserve mandated by Congress.  The fund reached near insolvency during the housing crisis, prompting several increases in both the upfront premium and the annual one. 

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