HAWK: Homeowners Armed With Knowledge Program

The Federal Housing Administration (FHA) gives homebuyers a break on mortgage insurance premiums through the Homeowners Armed with Knowledge, or HAWK mortgage program.

With FHA as an insurer of mortgages, it is required that they have cash reserves. This cash reserves must amount to 2% of the total loans they have insured. That money is required to be kept in the Mutual Mortgage Insurance Fund. However, due to the housing market crash of 2008, the said fund saw a negative balance, so as a result, FHA has increased their mortgage insurance premiums for 5 consecutive years.

Currently, an FHA borrower would pay for Mortgage Insurance Premium upfront at a rate of 1.75%. An annual premium of 1.35% is also required, thus, if paying less than 5% down at closing and 1.30% of more than 5% is put down on a 30 year fixed, that number goes to .70% on a 15-year mortgage.

With the historically low interest rates, low down payment options and aggressive credit score guidelines, FHA has still been an outstanding solution for many. FHA had also noted that they also have educated borrowers. Educated borrowers are those who have been properly counseled. And based on statistics, this group had a 30% lesser chance of going into foreclosure than non-counseled FHA borrowers. So they created HAWK or homeowners armed with knowledge program.

FHA’s HAWK Mortgage Program

HAWK provides FHA borrowers with an incentive to have their mortgage insurance fees reduced; the upfront fee, the annual fee and another reduction after 2 years of good payment history. Here’s how it works and what HAWK Homeowners will get:

    1. 0.50 percentage point reduction in upfront MIP
    2. 0.10 percentage point reduction in annual MIP
    3. If there is no 90-day delinquency within the first 18 months, beginning with the start of the loan’s third year (i.e. 25th month), annual MIP will reduced 0.15 percentage points

The HAWK program is designed to make homes more affordable for FHA homebuyers, and to improve the overall loan quality of the FHA’s portfolio. The end result is lower annual percentage rate (APR) for HAWK homeowners. Finally, with lower monthly payments for its borrowers, the FHA expects fewer loan defaults that mean the agency can build it reserves quicker.

Please enter your information below to receive detailed information regarding the HAWK Program. The educated mind makes the best decision.

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