New FHA PMI changes

[StartingOver10]

Not a dumb question at all. 

In order to avoid the lifetime (of the loan) payment of PMI, you would have to 1) have a contract and 2) have an application to a lender in enough time for the lender to get a FHA case number issued for your new loan.

So, no a pre-approval won't work to avoid this new change.

[Anonymous]

Thanks for the response, that makes sense.

We have a lease until the end of August- so we looking to apply in June. 

I have a 740 credit score and the husband has around a 640-650 (last year it was 500!). Looks like we may need to look into a MassHousing program to avoid this PMI. We have 25k to put down- we were just looking at FHA due to his credit scores. I am unable to apply alone since I owe about 100k in student loan debt.

That just seems like alot of PMI to pay!

[StartingOver10]

Well, you might consider finding a property, getting it under contract and making full application in May rather than June.

Even if your lease is valid through the end of August, you could offer a 45 or 60 day closing, For example, say you go under contract May 20th and make application by May 24th and close by July 20th you only have one month extra rent you are paying and your first mortgage payment wouldn't be due until Sept if you closed in July. This is just an example of how to stretch the time to make it work for you. Of course, the seller would have to agree to a 60 day close in the contract. Some sellers actually prefer extended closings so they can prepare to move in an orderly fashion.

[Anonymous]

Good to know. We paid last months rent when we moved in too.... so August is paid for- so that scenario could actually work out pretty good.

In that case, when should pre-approval happen? We had some issues last year when we tried due to his credit scores but have been working hard to correct them. Does pre approval only take a few days? If so, could we just apply in the beginning of May or April even?

Thanks

[Anonymous]

Preapproval usually happens same day and a lot of times, takes only an hour. It takes typically 30-45 days to close after that.

[Anonymous]

If applied in May you have a great chance to avoid the lifetime MIP. Just dont wait until the last week to apply.

[Anonymous]

This was the primary reason why I had a great sense of urgency to get moving now. Well, that and the fact that interest rates are moving up. And if you are in South Florida (like myself), house prices are SKYROCKETING, not to mention that its definitely a seller's market out here now. Pre-approval is pretty much done (thanks to a certain board-member). House hunting is underway and looking to get some some house shopping done (thanks to yet ANOTHER board member). This board has been instrumental in getting me off in the right direction...