PMI - Private Mortgage Insurance

[Cactus Flower]

Is it true that starting this month (June) -- any FHA loans that are required to carry PMI - it will be for the life of the loan and will no longer drop off when there is enough equity in the home? That will mean 20% for everyone (new loans? refinancing? both?) down or 20% (or higher?) equity in your home to avoid it.

[Brian B The Loan Professor]

yes going forward all fha loans have PMI for the life of the loan

The options are conventional with a little more down or a refi to conventional when you get to the 20% equity level.

[Cactus Flower]

yes going forward all fha loans have PMI for the life of the loan

The options are conventional with a little more down or a refi to conventional when you get to the 20% equity level.

Thanks, I think I have a ways to go to have 20% equity in my home..I'm sure by the time I reach that.. the interest rates will be back up again - that's the sort of luck I have ;-)

Just wanted to know if the rumor I heard was true.

[Brian B The Loan Professor]

 

yes going forward all fha loans have PMI for the life of the loan

The options are conventional with a little more down or a refi to conventional when you get to the 20% equity level.

Thanks, I think I have a ways to go to have 20% equity in my home..I'm sure by the time I reach that.. the interest rates will be back up again - that's the sort of luck I have ;-)

Just wanted to know if the rumor I heard was true.

Do you currently have an FHA loan

what is the rate and when did you get the loan?

B

[Cactus Flower]

 

 

yes going forward all fha loans have PMI for the life of the loan

The options are conventional with a little more down or a refi to conventional when you get to the 20% equity level.

Thanks, I think I have a ways to go to have 20% equity in my home..I'm sure by the time I reach that.. the interest rates will be back up again - that's the sort of luck I have ;-)

Just wanted to know if the rumor I heard was true.

Do you currently have an FHA loan

what is the rate and when did you get the loan?

B

5% and escrow closed on May 27 2009.

[Brian B The Loan Professor]

I am afraid you missed it for FHA - You are better off Refinanicing to a conventional loan. You could grab a lower rate and have a loan that can eliminate PMI later.

[Lummy]

It might be worth looking at the numbers to refinance to conventional now. Convetional PMI is significantly cheaper than FHA. In addition to that, house prices have gone up in the last few months and you might have more equity than you think.

 

I bought with an FHA last year and just finished my refi to conventional a few weeks ago. My old PMI was 388 and my new with conventional is $103.

[saladdin69]

yes going forward all fha loans have PMI for the life of the loan

The options are conventional with a little more down or a refi to conventional when you get to the 20% equity level.

To dumb it down for me, so the main difference between fha and covnetional is % down now?

[road2freedom]

 

yes going forward all fha loans have PMI for the life of the loan

The options are conventional with a little more down or a refi to conventional when you get to the 20% equity level.

To dumb it down for me, so the main difference between fha and covnetional is % down now?

 

That used to be one of the biggest differences but now PMI is going to be a major factor. The new higher rates and lifetime PMI requirements are pretty brutal. Plus when you consider that rates are not likely to get lower than they are now, even a refi down the road may be more expensive than just coughing up the extra down payment now.

[luckydriver]



 

i think it's important to note 10% down means only 11 years of MIP. lets face it, many of us dont have 20% but 10 may be doable especially if the break even point is favorable.

 

 

 

 

For all mortgages regardless of their amortization terms, any mortgage

involving an original principal obligation (excluding financed Up-Front

MIP (UFMIP)) less than or equal to 90 percent LTV, the annual MIP will

be assessed until the end of the mortgage term or for the first 11 years of

the mortgage term, whichever occurs first.



For any mortgage involving an original principal obligation (excluding

financed UFMIP) with an LTV greater than 90 percent, FHA will assess

the annual MIP until the end of the

 

 

http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf

[Brian B The Loan Professor]

The PMI is a big factor but there are also different eligibility requirements

Conv can get in with 5% down - the rate and PMI will be risk base (on credit scores) so the higher the score the better the rate

For 5% down many places will want at least a 680

Your debt to income will be capped a little lower than with FHA (45% for conv.)

You must show reserves for conv.

 

B

[luckydriver]

wait, you can get conventional with 5% down? i didnt know. i'm also glad to hear PMI is cheaper with conventional.

 

where i would fail would be reserves unless they let you count a ROTH IRA. then id definitely have 3 months of mortgage payments in reserve.

[Brian B The Loan Professor]

wait, you can get conventional with 5% down? i didnt know. i'm also glad to hear PMI is cheaper with conventional.

 

where i would fail would be reserves unless they let you count a ROTH IRA. then id definitely have 3 months of mortgage payments in reserve.

As long as you can acces it in an emergency you can count it

[Lummy]

wait, you can get conventional with 5% down? i didnt know. i'm also glad to hear PMI is cheaper with conventional.

 

where i would fail would be reserves unless they let you count a ROTH IRA. then id definitely have 3 months of mortgage payments in reserve.

You could use this PMI calculator from Radian to get an idea of how much conv PMI would be.

http://www.radian.biz/page?name=MIRateFinder&src=QL

 

You would want to use BPMI (Borrower paid)

[road2freedom]

 

wait, you can get conventional with 5% down? i didnt know. i'm also glad to hear PMI is cheaper with conventional.

 

where i would fail would be reserves unless they let you count a ROTH IRA. then id definitely have 3 months of mortgage payments in reserve.

As long as you can acces it in an emergency you can count it

 

How does this work with employer plans usually? Is it based on the total balance, vested, or amounts available for withdrawal or loan? Just curious to see how specific they get.

[cputrwz]

Well for 401k loans (dunno what IRAs do) - they go by your vested balance and then each employer will have different criteria for what they allow. Most employers I've been with have allowed you to have 2 loans at one time against your 401k and then there is always the hardship withdrawal. My current company has a minimum loan amount of 1k. And usually you can only take a percentage of your vested balance, like 50% for a loan. A hardship withdrawal you can take the full vested amount.

 

To be counted as reserve money, I was told it would follow the same guidelines... so whatever amount you were allowed to takeout or do a loan for would be what you could use for reserves. And different banks will allow different percentages of the vested amount to be used for reserves.

Edited June 7, 2013 by cputrwz

[road2freedom]

Makes sense. I just wonder what they would ask for as proof... if the vested balance I'm sure a statement would suffice. If it's the actual loan or w/d amount, a SPD?

[luckydriver]

 

wait, you can get conventional with 5% down? i didnt know. i'm also glad to hear PMI is cheaper with conventional.

 

where i would fail would be reserves unless they let you count a ROTH IRA. then id definitely have 3 months of mortgage payments in reserve.

You could use this PMI calculator from Radian to get an idea of how much conv PMI would be.

http://www.radian.biz/page?name=MIRateFinder&src=QL

 

You would want to use BPMI (Borrower paid)

 

 

i must be doing somethign wrong. i put in the same mortgage amount i have now. 95% ltv and got 103 vs the 75 i now pay with fha (entered 750 fico even)

 

Lender CLTV (%) i put at 95..is that correct?

[Lummy]

 

 

wait, you can get conventional with 5% down? i didnt know. i'm also glad to hear PMI is cheaper with conventional.

 

where i would fail would be reserves unless they let you count a ROTH IRA. then id definitely have 3 months of mortgage payments in reserve.

You could use this PMI calculator from Radian to get an idea of how much conv PMI would be.

http://www.radian.biz/page?name=MIRateFinder&src=QL

 

You would want to use BPMI (Borrower paid)

 

 

i must be doing somethign wrong. i put in the same mortgage amount i have now. 95% ltv and got 103 vs the 75 i now pay with fha (entered 750 fico even)

 

Lender CLTV (%) i put at 95..is that correct?

Hmm.... when did you close your FHA loan? What does it say is the MI base rate %?

[luckydriver]

closed oct 2010

 

 

MI Base Rate 0.67% MI Premium Rate 0.67% MI Premium Amount $103.85 i put 95% under ltv and lender ltv..MI coverage 30...first mortgage term 30...750 fico and 40% dti

[Cactus Flower]

This has been an informative topic, so b/c I started it, I just wanted to THANK everyone for the info.. but yes, I have been told a few times that it is not in my best interest to (streamline) refinance FHA - as long as I was upside or had little/no equity, because the increase in PMI premiums would strip away any savings I could possibly realize on a lower interest rate. Perhaps if I get enough equity in the house, then I can go conventional and avoid PMI altogether... of course the interest rate has to stay down..

it's all a waiting game.