FHA Mortgage Insurance Premium & Monthly Mortgage Insurance and how it works -- Part 1 of 3

By
Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

nestle crunch

 

It's crunch time, especially with today's market. Does this make you hungry? Well, many loan officer's are very hungry and not that busy. Which leaves us to my rant of inexperienced loan officers trying to give their clients a FHA mortgage

Word of advice :  If you find someone giving you false information or information that doesn't make sense, why stay loyal to them? Seriously, run away, don't walk. Most of the criteria by FHA and HUD is written in stone. No lender can change this no matter what you think or have been told.

In Part 2, I will give you 2 great examples of two consumers that got my name from the internet. Both were blatantly lied too and you would want to read this.

In Part 3, I will let you know the different types of refunds that could be available to you. Especially since these all have changed in the last several years or so.

 

 

FHA One-Time Mortgage Insurance Premium is one thing that is written in stone. This is called your FHA MIP. No matter how much you put down as a down payment, no matter how good or bad your credit is, or even the credit scores, you will have this premium added onto your loan amount. 

 

How does this MIP work?  The upfront mortgage insurance premium of 1.5% of the loan amount is usually added onto the loan amount. The MIP can be paid in cash, but typically is just financed into the loan. Example :  $100,000 loan amount x 1.5% = $1,500. You total loan amount would be $101,500 and the rate is based on the total loan amount.

 

Monthly Mortgage Insurance :  Known as MI or MMI. This is a fee that is paid monthly no matter how much you put down as a down payment. The fee is .5% of the loan amount divided by 12 months. $101,500 loan amount x .5% = $507.50. Then you divide this by 12 months and this is your monthly mortgage insurance.  $507.50 divided by 12 = $49.29/month. Even if you put 20% down, it will be there for at least 5 years no matter what. This is just a bare fact that not every loan officer knows and will be discussed in Part 2.  If you do pay down your principal and it reaches 78% LTV, you can appeal to have the monthly fee waived. But you still would have to have had this monthly insurance fee for at least 5 years.

 

 

Series on FHA Upfront MIP & Monthly MIP : 

 

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For more information on FHA cash out refinancing, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

 

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For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

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For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Rainmaker
308,911
Mike Mueller
Tech and Social Media Consultant - Walnut Creek, CA

Jeff - Great information and especially in this time and day.

BTW: Jeff just started what may become one of the most important groups for every professional agent. 

The FHA Mortgage Group

Knowledge is power.  The more you know about FHA the better.  I recommend joining the group just to get in on the information stream.  It could save your career. 

 

How's that for drama?


Aug 16, 2007 02:58 PM #1
Rainer
78,239
Kim Murphy
1st Advantage Mortgage / Draper and Kramer - Carol Stream, IL
Mortgage Loans in DuPage, Kane, Cook, Lake, Will C
Jeff - Great information, upfront MI is different and hard for some to understand.  I am looking forward to the next 2 in this series!
Aug 16, 2007 03:33 PM #2
Rainmaker
308,911
Mike Mueller
Tech and Social Media Consultant - Walnut Creek, CA

Kim - Join the group!

I imagine doing biz in the great state of Illinois (My Birthplace), FHA is something that could really help.


 

Aug 16, 2007 03:58 PM #3
Rainer
78,239
Kim Murphy
1st Advantage Mortgage / Draper and Kramer - Carol Stream, IL
Mortgage Loans in DuPage, Kane, Cook, Lake, Will C
Mike - I am an OFFICIAL member!  Thanks for the invite!  FHA is coming hard and fast in Illinois as I'm sure it is in most places.  FHA I think has been feared by many Realtors and consumers by the bad information.  It is a GREAT option especially now!
Aug 16, 2007 04:07 PM #4
Ambassador
260,484
Fran Gatti Licensed in CA & OR
RE/MAX Integrity - Medford, OR
Managing Principal Broker - RE/MAX Integrity

Jeff,

Good stuff to know.  FHA is probably going to become very popular.

Aug 16, 2007 05:01 PM #5
Rainmaker
147,596
Gary Miljour
Starboard Financial - Tempe, AZ
Mortgage Lending for Arizona and California

Jeff,

Great Post as always.

 PS.

Just joined the FHA group.  I always want to find out more about one of my favorite products. 

Aug 16, 2007 06:18 PM #6
Rainmaker
290,845
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

Thank you Jeff.  This is wonderful stuff and a testimony to the education that the Active Rain communitie provides.

thanks

 

Aug 16, 2007 08:54 PM #7
Rainer
340,432
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI
Jeff:  I've touted FHA/Va products for years because I believe in the fairness of the product, the availability and the buyer friendliness of them.  I thought I knew alot about the product and did know about the upfront MIP, but I never knew the ratio of the continuing mortgage insurance.  This will help me tremendously when doing "quick" numbers for buyers prior to writing an offer.  Once again you've eductated me.  Thank you!
Aug 16, 2007 09:57 PM #8
Rainmaker
429,821
Tom Burris
NMLS# 335055 - Baton Rouge, LA
Texas/Louisiana Mortgage Pro - 13 YRS Experience

I think that only 1 out of 10 brokers in texas are FHA approved. They 'sell around' FHA because they cannot afford the audits and fees associated with being approved.

FHA isn't for everyone. But it is GREAT for a lot of folks. Good jobg, Jeff. I look forward to parts 2 & 3

 

Aug 16, 2007 11:54 PM #9
Rainer
78,239
Kim Murphy
1st Advantage Mortgage / Draper and Kramer - Carol Stream, IL
Mortgage Loans in DuPage, Kane, Cook, Lake, Will C
Jeff - Didn't the no upfront MI for condo's change?  I thought it was now required on all properties?
Aug 17, 2007 12:56 AM #10
Ambassador
745,711
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Mike....  wow, thanks for the plug and for the compliments.

Kim....  I agree and I didn't go into detail and why there is upfront mortgage insurance. I just wanted to basically put it out there. I have a client as we speak that has been told that the upfront MIP is 2.25%...  OUCH   that was what, like 3 to 4 years ago, when it was changed?  And this is an owner of a mortgage company.  SAD!!

Mike...   I guess you are my PR person for this group?  ;o)  Do I have to put you on a salary?

Kim... what's sad is that FHA should have always been at the top as an option. Many lenders took the easy route and the quick route which was subprime and high LTV loans by fannie.   But yes, it will catch on even more so now.

Fran..... yes it will and thanks for stopping by.

Gary.....  thanks for joining the group and for the compliment.

Kate.....  I agree about what AR has brought to so many. I just hope we see some more. I have learned a lot since joining. Just getting tired of the wishy washy blogs....  hey, they can write what ever....   but I want to be recognized by the consumer.

Kris.... it's extremely fair and as a few have mentioned, been feared in the past and even still now. it's because so many people don't know all the functions of FHA. And yes, back in the mid 90's and partially up to'99, it was strict on the appraisals, but that was about it.

Tom.... hey, that should be good for you, right?   Thanks for the kind words.

Kim.....   you are correct on this. I changed it. I was stuck on it from so many of years being the oposite. What's sad is that this is still on many FHA web sites now, done by other lenders. I did add the 15 no MI though. Thanks for following up. I was going to check with my underwriter before hand, but just added it in there first.  thanks

Aug 17, 2007 01:19 AM #11
Rainmaker
308,911
Mike Mueller
Tech and Social Media Consultant - Walnut Creek, CA

Jeff - Salary?  I'll take it.  I want full medical and dental too. 

Here's another little link love for you...

I'm not an FHA Expert


Aug 17, 2007 04:32 AM #12
Rainer
51,429
Lexa R. Montierth
Tierra Antigua Realty - Sahuarita, AZ
Real Estate Sales Agent and Marketer

Jeff, When we bought our first home with an FHA mortgage, we were told that as soon as we have 20% equity, call our lender and get the PMI off our payment.  When we refinanced it, I wondered why we still had to pay it again.  The only good thing I can say is I just found out through HUD's nifty website, that we have almost 1600 coming back to us because we sold that house before 5 years.  

When I was closing on a deal on friday, I was telling my clients the same thing I was told and learned, that if they got 20% equity, call up and get it taken off.  Thankfully, the Title agent had just learned of the "You pay it for the full 5 years" thing and corrected me.  Timely info here, Jeff.  Thank you!

 

Lexa Montierth 

Aug 19, 2007 11:05 AM #13
Anonymous
Henry...

I'm currently refinancing my CONDO in the state of Illinois and the mortgage company is telling me that I will have to pay $4226.25 UPFRONT for the mortgage insurance premium (MIP).   Someone told me that CONDOS do not require upfront MIP, but a monthly MIP is required.  What do you think?

Feb 11, 2009 10:22 AM #14
Ambassador
745,711
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

HENRY.... this has actually changed... this was written in 2007. You are now required to pay for both the MIP and the monthly MI.  thanks and if you want to verify this and to see if your good faith estimate is good, I have an asscoiate that does mortgages extremely well and works in Illinois. Depending on how you got your current lender, it might not be a bad idea to have someone compare.  Did your current lender mention to you that rates have gotten better in the last 2 days?  I can be reached at jbelonger@ihmci.com , if you want me to pass along your info.  thanks, jeff

 

Feb 11, 2009 10:29 AM #15
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