More Level Playing Field May Benefit FHA

Reblogger Roy Kelley
Real Estate Agent with Realty Group Referrals 16766

There is a streamlined FHA refinance program in place through FHA, which would facilitate a less expensive refinance of an existing FHA mortgage loan.

Please visit the original blog if you wish to leave comments.

Original content by Randy Kirsch NMLS #1012303

Private mortgage insurance premiums are higher for people with lower credit scores.  FHA mortgage insurance premiums are the same for all FHA borrowers regardless of their credit score.  The Urban Institute recently posted a blog that indicates that the break-even credit score with a 95% LTV fhahas risen from a FICO score of 680 to a score of 740.  The blog points out some interesting scenarios that may well benefit FHA and / or FHA borrowers.

While the Obama administration estimates that approximately 2,000,000 new FHA borrowers will be benefited by the lower FHA MIP rates, the Wall Street Journal estimates that an additional 3,000,000 existing FHA borrowers might benefit from the lower MIP by refinancing their existing FHA loans into new FHA loans to which the lower MIP would apply. There is a streamlined FHA refinance program in place through FHA, which would facilitate a less expensive refinance of an existing FHA mortgage loan.  The streamline refinance option is explained in detail HERE.

The Urban Institute blog also reiterates the obvious, to-wit: the reduced FHA MIP will benefit low-income and first time buyers who need a high LTV loan at a reasonable interest rate, and who have a lower credit score and a higher debt-to-income ratio ("DTI" ratios).  FHA does insure loans for borrowers with a credit score as low as 580, and the DTI ratios for FHA are 31% (housing expense)/43% (all monthly payments). Conventional lenders generally require a minimum credit score of 620, and DTI ratios are an average of 28%/36%.

With the lower MIP, FHA is now on a more level playing field with private mortgage insurers.  More buyers may find that FHA products are more affordable than once thought and the high volume of business may well provide a revenue stream for FHA that will keep it on the road to recovery.  It is no longer safe to discount FHA as a possible loan source without doing the math.

Your Dedicated Mortgage Consultant!

Randy Kirsch, NMLS #1012303

Right Trac Financial Group, Inc. NMLS #2709

110 Main St.

Manchester, Ct. 06042

Office: 860 647-7701 X120

Fax: 860 647-8940

Cell: 202-827-6434

Email: randy@righttracfg.com

www.righttracfg.com

 

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The blogs written and published by Randy Kirsch are not in any manner whatsoever to be considered as legal advice or as a legal opinions.  If you have legal questions or concerns regarding any area of real estate law or mortgage law you are advised to consult a licensed, competent real estate attorney in your local area to address your concerns and questions.

 

Randy Kirsch does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.

 

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Rainmaker
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Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Another great reblog and many first time home buyers especially will enjoy this info

Jan 23, 2015 11:00 PM #1
Rainmaker
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Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Please be sure to leave comments at the original blog by Randy Kirsch

Jan 23, 2015 11:33 PM #2
Rainer
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Randy Kirsch
Right Trac Financial Group, Inc., NMLS# 2709 - Manchester, CT
(NMLS# 1012303) Your Dedicated Mortgage Consultant

Thanks for the reblog Roy.  I think this information cannot be passed around enough.

Make it a great weekend!

Jan 24, 2015 08:06 AM #3
Rainmaker
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Roy Kelley
Realty Group Referrals - Gaithersburg, MD

It is sometimes a good idea to revisit old blogs and reblogs. We might even find some good ideas for new posts.

May 06, 2018 02:22 PM #4
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Rainmaker
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Roy Kelley

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