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 :
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