NOW WHAT? Missed the deadline re: FHA mortgage insurance on Friday?

By
Mortgage and Lending with Seacoast Mortgage Corporation, RI (20021119LB & 20031576LL), MA (MC2107) & CT MLO 10920

Life is NOT over.  There are alternatives! 

 

This past Friday was the deadline to issue an FHA case number to avoid the forever mortgage insurance on down payments less than 10% down.  Effective on June 3, if a buyer places less than 10% down using FHA financing, the mortgage insurance will remain on the life of the loan: yes...FOREVER!  If the buyer can place more than 10% down, the mortgage insurance will last for 11 years.  The old rules were minimum of 5 years and the LTV must reach 78% of the original purchase price.

 

So, one might say: just refinance if you are now stuck with the new rules.  But refinancing costs money and the rates may never be this low again.

 

For those who can deduct the mortgage insurance costs on their taxes, they have some recovery.  But, for those who can not deduct, they will be seriously thinking of refinancing in the future.

 

There are other options aside from FHA with low down payments for buyers to consider:

 

1) Fannie Mae and Freddie MAC: 5% down.  Yes, there is mortgage insurance, but it only remains until 80% LTV is reached based on market value NOT purchase price.  Mortgage insurance can be paid by the lender with a higher rate or paid with a single premium by the buyer.

2) USDA: if you purchase in a rural area AND you meet income limits for single family residences and condos that are FHA approved.  There is mortgage insurance, but much less than FHA: approximately 1/3 of the cost and, yes, it is forever on the loan


3) VA: for our beloved VETS: 100% financing on 1-4 units.

4) Fannie Mae and Freddie Mac 10% down no mortgage insurance options are also available

 

Always choose a mortgage consultant who spends the time and advises you of ALL your options.

KNOWLEDGE IS POWER!

Posted by

Ann Sabbagh, President

"The BEST compliment is a client referral: Thank YOUUU!"

Seacoast Mortgage Corporation

401-305-6906 or 508-243-1190

Residential & Commercial Financing

MLO10920

RIAR: teacher for "The Mortgage Course"; "Valuation of Commercial/Investment Real Estate"; "Reading Financial Statements"

 

"When you choose me as your mortgage consultant, you also choose a financial planner who cares about YOUR financial strength."

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Rainmaker
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Kathy Sheehan
Bay Equity, LLC 770-634-4021 - Atlanta, GA
Senior Loan Officer

I think this last set of changes is really going to impact the first time home buyer market.

Jun 04, 2013 11:33 AM #1
Rainmaker
601,460
Sharon & Bruce Walter
Keller Williams Realty Lafayette, IN - Lafayette, IN
West Lafayette homes for sale
Ann, this is great information. Thanks for posting this summary of changes in the FHA financing.
Jun 04, 2013 11:56 AM #2
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Fred Griffin
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Forever is a long time!

   FHA will lose its appeal when interest rates go up.

Jun 04, 2013 12:29 PM #3
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Rainmaker
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Ann Sabbagh

President, Sr. Loan Officer
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