12-02-2012 02:25 PM - edited 12-02-2012 02:26 PM
Is it possible to get an FHA loan and put 20% down so therefore not having PMI or is PMI required on all FHA loans? Already applied for an FHA loan but won't be ready to close until mid 2013 and now I see they may change the PMI rule so it's for the life of the loan.
Can't go conventional due to a Ch 7 bankruptcy that was discharged Jan 2010.
12-02-2012 06:01 PM
12-02-2012 06:25 PM
Yes it can be done.
The usually scenario is the loan has to be
1- a 15 year loan
2- 22% paid down ( 78% ltv)
12-02-2012 06:35 PM - edited 12-02-2012 06:43 PM
True, with a 15 yr loan, once you get to 78% LTV then the MI gets cancelled. With a 30 yr FHA loan its 78% and 5 year minimum. Meaning, you have to pay at least 5 years worth and now possibly for the life of the loan if the rules change.
12-02-2012 06:57 PM
The rules and qualifications can change at any point. Some times these changes benefit the buyer and some times the changes hurt the buyer.
The catch to not paying the monthy mortgage insurance fee is paying the one-time upfront fee, having a 15 year mortgage term, and paying 22% down ( leaving you with a 78%LTV ).
I did forget to mention the upfront fee on my last post my error sorry.
But in my opinion paying up front fee is worth it.
What causes issues about this scenario is the monthly payment on the 15 year loan Is generally not affordable to most applying for FHA loan. Most consumers applying for FHA apply for lower down payments and credit issues. Not saying that this is your personal situation, just giving my opinion on why most apply under FHA guidelines for qualifications.
12-02-2012 07:05 PM
12-02-2012 07:11 PM
Let me mention one more thing as far as 5 years in case any one else reads this.
Yes your mortgage insurance premium can be dropped after 5 years as long as you have reached 78% LTV.
If you are just paying your monthly payment and only put down 3.5 % you will not be close to a 78% LTV in 5 years.
The down payment you put down will play a part in how long it will take to reach that 78%LTV.
Also paying additional payments will play a part in how long before reach that 78%LTV.
12-02-2012 07:27 PM
What are your thoughts on doing an FHA loan, rolling the upfront fee into the loan and then refinancing into a conventional loan 6 months later? Any down sides to this plan?
You would have to look at the numbers available 6 months from now. The cost to refinance may not be worth all the trouble and fees associated with the refinance ( closing fees, appraisal fees, broker fees ( even banks and credit unions charge fees) etc etc... Then you always have the possibility the interest rates go up ( not likely in my opinion, but I have been wrong before) .
We all have different intentions on if we are buying a forever home, a home we plan on selling and possibly upgrading to a larger home down the road, or even possibly a future income potential. Many different factors to consider if refinancing is cost worthy when you are ready.
It will always be a personal choice, but hopefully your broker or lender will weigh all your options and explain in their opinion if refinancing is honestly worth it In your peticular situation.