Can You Eliminate FHA Mortgage Insurance? Mining for Gold!

Can You Eliminate FHA Mortgage Insurance?  Mining for Gold!


     A comment often heard regarding today's mortgage process is that it's "difficult" or tedious.  There are too many questions, requests for information, or details to navigate ...

     And while it is true that there can be much to gather, to do, to talk over, to digest for Borrowers ... as their Mortgage Originator, I see real positives in that. 


     Why?  


     Within all that info and detail gathered from mortgage applicants, lies opportunity.  

     The more info and detail I have at my disposal as your Originator, the better the possible outcome.  All revelations help me find the best options and mortgage program to fit your needs.

     The method of gaining the info and detail may seem many a bit slow and tedious, but as with miners panning for gold ... the end results can be very worth the effort.

     It's hard to find a better example of this being true than when talking about Mortgage Insurance.  And that's whether considering its implementation or elimination.  In both instances, the benefit or opportunity is discovered in the details.  

    It's true that there are plenty of details to be mined and considered too ...  

     I've already broken down much of that info down in 3 previous articles.  ("Understanding Private Mortgage Insurance. PMI: The Pros and Cons", "What is FHA Mortgage Insurance? How Does it Work?", and "How to "Replace" Mortgage Insurance".)  In those posts, I speak of the various nuances of Mortgage Insurance, both on Conventional Loans and on FHA Loans. 

    One important nuance to remember:  In the last few years, the FHA (Federal Housing Administration) has enforced Mortgage Insurance Premiums (commonly referred to as MIPs) for the entirety of the loan on 30-year loans.

     So with my clients (and others) who purchased a home in the last 2 to 3 years with FHA financing, there may be Refinance opportunities to be found.  Opportunity to:

  • Refinance their FHA Loan to a Conventional Loan 
  • Reduce or Eliminate Monthly Mortgage Insurance costs
  • Possibly lower their Interest Rate
     
     FHA Loan-holders with enough equity ... and high enough Credit Scores, can lower their Monthly Payment by lowering their Monthly Mortgage Insurance costs. 

     Or:  They may be able to avoid Mortgage Insurance entirely with a new Refinance Loan at 80% or less than their Current Appraised Value. 

     The following is a good example of this.  It walks you through the details and process utilized to make a decision regarding the possible elimination of FHA Mortgage Insurance.
     
     Consider all the many details and info needing to be mined, understood, and weighed in order to make a sound decision and move forward ...  


  • My clients' FHA Loan utilized on a new Construction Purchase 
  • Loan made in April of 2014  
  • Amount borrowed: $239,500
  • 3 1/2 Down Payment (Minimum Down Payment)
  • Monthly Mortgage Insurance Premium: $258  (Important to note:  In April of 2014, FHA had increased the factor to 1.35% of the Loan Amount for the Annual Mortgage Insurance calculation.  Since that time, the factor has been reduced to .85%. Proof that FHA can manipulate/change the cost of Mortgage Insurance Premiums.)
  • Market Conditions:  In their housing market, there had been more new construction and appreciating home prices 
  • Home Owner's monetary investment to home improvements
  • Value of those Home Improvements made to their property and quality of their home. (Resulted in a higher Appraised Value: $268,000)
  • With a Conventional Loan:  The Borrower's Loan-to-Value became 85% and reached the lowest level of Private Mortgage Insurance.  

     The process of gathering of all this information ... the act of seeking details personal to their individual financial and property scenarios, revealed and presented my clients' options for examination.  And opportunity.  


     They discovered they could reduce their Monthly Insurance Costs from $258 a month to $38 a month ...

     Think the process and effort is worth it?  $220 a month is quite a "gold strike" or savings ...

     It's important to keep in mind though:  Not every scenario can reap this positive ... or level ... or outcome.  Everybody's situation, and the details revealed during the process, are different.

     But it's equally important to remember:  Unless you take the time, make the effort, ask the questions, dig for the details regarding your personal situation ... you'll never know what could be possible.  Or IF you have options or opportunity to save. (Or possibly even sell and buy again.)

     As the old saying goes, "the devil is in the details" ...  

     But so's the "gold".  There may be "gold" to be discovered if you can Refinance your present FHA Loan to a Conventional Loan.  

     Only through the questions asked and details revealed throughout the process will we discover if those riches exist for you can be mined ... 


* Hoping to Buy or Refinance a home in New Lenox or elsewhere in the Chicagoland area? Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:


Gene Mundt
Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed


American Portfolio Mortgage Corp.

nmls #175656


Direct: 815.524.2280

Cell/Text: 708.921.6331

eFax: 815.524.2281




Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 
and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 
Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 
Cook County, and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed!






















What is FHA Mortgage Insurance? How Does it Work?

What is FHA Mortgage Insurance? 
How Does it Work?
    

     Mortgage Insurance remains a hot topic for potential Borrowers, current Borrowers, and professionals alike.  And of great interest, no matter which type of mortgage program it's utilized in ... Conventional or FHA (Federal Housing Administration).

     While I've written in the past about Mortgage Insurance as it relates to Conventional financing, I now want to focus on its counterpart within FHA Loans ... which is mandatory, guaranteed, and government issued (not Privately backed by Corporations).  (See past posts, "Understanding Private Mortgage Insurance. PMI: The Pros and Consand "How to "Replace" Mortgage Insurance"

     Since FHA Loans are government insured, it should come as no surprise that the Mortgage Insurance required with their use is also government-issued and regulated.  Or that its cost is directly related to the performance (repayment) of Borrowers' FHA Loans.

     As a result, over the last 7 to 8 years, there have been many revisions to the cost for FHA Mortgage Insurance.  Revisions driven by great losses (foreclosures) suffered throughout the Housing Crisis, especially in the FHA Mutual Mortgage Insurance Guaranty Fund throughout 2008 and 2009.

     The costs of Annual/Monthly Mortgage Insurance, as well as their upfront charges, have changed almost as often as the manual scoreboard at the Chicago Cubs' Wrigley Field this year. (Yes, a shameless plug and shout-out for my Cubbies!)  
     
 More Valuable Mortgage Insurance Info!
     Here's a little insight into FHA's two (2) types of Mortgage Insurance payment ... and how costs are currently figured on each:

     1.  UPFRONT Mortgage Insurance:  As of the writing of this article (9/29/2016), costs are at 1.75% of the Loan Amount.  This cost is financeable.  In other words, the cost is added to the Base Loan Amount, in most cases.

        Example using a Base Loan Amount of $200,000:


$200,000 (Base Loan Amount)  
X  
.0175%
Cost of:  $3,500 

As a result, the Borrower can increase their Loan Amount to $203,500

     2.  PAID Monthly Mortgage Insurance Premium (a/k/a MIP):  Most FHA Loans are issued with Loan-to-Values greater than 95% (3.5% Down Payment is typical on Chicagoland-area FHA Loans).  In these cases, Borrowers are paying 0.85% X Loan Amount.

       Using the same Base Loan Amount as above, the equation for Paid Monthly Mortgage Insurance would be: 

$200,000 (Base Loan Amount)  
X 
0.85%
 
by 12 (months)
=
Cost of:  $144.15/month

     
     As with most Mortgage info and programs, there are a few asterisks or conditions to note and understand:

  • If the Borrower makes a Down Payment of more than 5%: Mortgage Insurance costs drop to .80% ... or $135.67/month.  (Utilizing the same scenario as above)
  • The above rates apply to 30-year term loans
  • Costs come down considerably on FHA Loans with 15-year terms  
  • They also drop when Down Payments of 10% or more are made
  • In areas with higher cost housing: FHA Loans greater than $625,500 pay 1.05% on loans with Loan-to-Values above 95%.


     As of this writing (9/29/2016): Mortgage Insurance is in place for the entire term of the Loan on ALL 30-year loans with less than 10% Down Payment.  

     Loans with 10% Down Payment or more will be allowed to eliminate monthly-paid Mortgage Insurance after 11 years.  (This has not always been the case.  Discussions about this remain ongoing, so stay tuned ... and remain in contact with me for updated info.)

     After viewing the above, do you understand why I say that Mortgage Insurance remains a topic of interest ... and perhaps a bit of confusion?  The constant changes dictate it so.

     So the best advice I can provide, if considering the purchase of a Chicagoland home or the refinance of one where Mortgage Insurance may come into play?  Talk to me as soon as you decide you hope to buy.

     That way you get the facts as they pertain to your personal financial scenario, your financing options ... and the most current, up-to-date information regarding Mortgage Insurance ...  


 

* Hoping to Buy or Refinance a Home in New Lenox or elsewhere in the Chicagoland area? Contact me! I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:

Gene Mundt

Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed

American Portfolio Mortgage Corp.

nmls #175656


Direct: 815.524.2280

Cell/Text: 708.921.6331

eFax: 815.524.2281


 Get a Quote Now!


Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 
and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 
Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 
Cook County, and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed!
































                             

Does Your Mortgage Originator Possess the Right Ingredients?

 Does Your Mortgage Originator 
Possess the Right Ingredients?

    
     A couple of days ago, I received a comment regarding my recent blog/post, "How to "Replace" Mortgage Insurance" from a fellow real estate industry professional. (Thank you Patricia Feager, Dallas Premier Keller Williams Realty, Flower Mound, TX) ...

     Within that comment, Patricia said ...

     "Gene, you have a skilled talent that explains things on the level I can understand. Thank you for sharing this outstanding and very educational information!!!"

     I greatly appreciated the kind words she wrote, as my number one goal as a Mortgage Originator (and writer) most certainly is to help my clients successfully close their loan. But just as important is ... that they fully understand their options, the mortgage products they'll utilize, and the mortgage process they will navigate.  

     Modern mortgages being what they are, that can prove challenging at times.  Learning I had been successful at doing that for Patricia was certainly fulfilling.  The comment she made, however, pointed out what I think is a growing issue for Originators and lending industry bloggers alike.  

     One of the very things that make current mortgage programs (and the process itself) far better for current Borrowers, also can increase the difficulty of providing information to them. 

     What do I mean?

     I've used an analogy to explain the similarity between the modern mortgage and snowflakes or fingerprints in the past.  That analogy reflects the nature of mortgages currently. Simply, no two mortgages or mortgage processes are ever completely alike.

     Even what are viewed as very small differences between Borrowers, their credit, finances, or scenario ... can cause hugely different outcomes in programs secured, process experienced, and success found.  Mortgages have become that uber-sensitive to the individual Borrower, their credit, and financial scenarios.  

     You simply can no longer compare one Borrower's situation to another.  But try explaining that uber-sensitivity ... those "asterisks" ... those differences to a Borrower (either verbally or in written word).  It can prove very challenging.  

     This is a current reality within mortgages.  A reality that proves how very important it is for potential Borrowers to do their homework when it comes time to find a Mortgage Originator for their financing needs. 

     Now it's important to stress that Borrowers need to pair this reality with a necessity.  For this "reality" and the "necessity", I refer to can go a long way towards making their transaction successful or not.       

 Testimonials for Gene Mundt, Mortgage Originator

      Think of this combo as a recipe.  A little of this and a cup of that.  


     Two of the most important ingredients in the recipe should be the following:

     1.  It's absolutely essential that Borrowers find and work with an Originator that represents a volume of Borrowers ... consistently.  Here's why:

     There's an old saying in the real estate industry ... "to conduct business, you must be doing business".  That's never been truer than in today's mortgage originations.

     What does that mean?  Simply, Mortgage Originators need to conduct a steady volume of business to stay "on top of their game".  

     By conducting business, they continue to learn and hone their craft.  They gain extensive hands-on experience. They also grow a deeper well of knowledge with which to navigate the "sensitivities" and "asterisks" that will be encountered during the underwriting and processing of  clients' mortgages.  

     These Originators know best how to circumvent or address issues that might arise.  Pro-actively, swiftly, successfully. 

     So if you're someone looking to secure a mortgage soon (or in the future), first look for an Originator with a pipeline of work.   Both past and present.  

     2.  Then match it with an Originator that also cares about communication ... and the quality with which they communicate.  

     Evaluate these skills closely:     

  • How did they respond to my initial outreach?
  • How quickly did they respond?
  • Was the information or explanations offered thorough?Was it easily understood?  (Both verbally and written)
  • Were they clear and concise?
  • Did they take the time to answer questions fully?
  • Did they offer a full menu of options for future communication?
  • More ...


     If they check these boxes, most likely they will continue to communicate in that manner, provide you the quality service you deserve from transaction start to finish, and the perfect recipe for success.

     Let me know if you have questions or if I can be of assistance ...





    
    * Hoping to Buy or Refinance a Home in New Lenox or elsewhere in the Chicagoland area? Contact me! I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:


Gene Mundt

Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed
American Portfolio Mortgage Corp.
nmls #175656

Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281




Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 
and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 
Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 
Cook County, and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed!





Ready for Fall? It's Arriving Soon

Ready for Fall?  It's Arriving Soon


Friend ...


Maybe it's because football season has started. Maybe it's the kids being back in school. Or because the night air is cooler. But a sense of Fall has arrived here in Chicagoland ...

The Fall Season brings changes with it. Changes in temperatures. Changes to the clothing we wear. Our focus seems to shift with the coming of shorter days, falling leaves, and crisp air.

Fall can be the perfect time to do a multitude of things. You can prep your home for the upcoming winter weather ... or for Fall listing and sale. 

But whether you're moving on or staying put, Fall is a great time to declutter and organize your home inside and out ... and your finances too.

I've googled like crazy to find interesting articles filled with Fall info, ideas, tips, and photos. Articles that will help you usher the Fall Season in at your house. I hope you enjoy reading the articles offered below and that they inspire you to make any needed changes.

Remember that I remain at your disposal to answer any questions or address any concerns you have regarding your Mortgage, credit, and finances. Don't hesitate to contact me at any time.

Gene

******************************************


10 Things To Declutter From Your Home During The Fall ...

While enjoying this change of season make sure to get summer clutter out of your home, to get ready for these new beginnings and also for the holidays that are quickly approaching. 

Here's my list of 10 things you should declutter from your home in the fall to get you going. (MORE ...)

Fall Maintenance Checklist ...

You’ll be ready for winter’s worst and head off pricey repairs with these simple preventative tasks. (MORE ...)

And ... Your finances can always use some maintenance too.  Things to consider this Fall Season:





Love everything Fall?  

Fun Facts?  New Fall Shows? Fall Travel?  Fall Festivals?  

These websites have some great ideas for you and your family...








     
     I hope you enjoy my newsletter and services. If you do, I’d appreciate your Review of my services on:

                                                           Yelp
                                                          Trulia 
  or 

 Thank you!









How to "Replace" Mortgage Insurance

How to "Replace" Mortgage Insurance
     


     
     The many questions and comments I received regarding my recent post about Private Mortgage Insurance prove that PMI remains a topic of real interest and concern for Borrowers and real estate professionals alike ...

     After reading my post, many readers raised the question, "Is there any way to avoid paying monthly Mortgage Insurance"?  The short answer to that question is "yes", there is.  

     But as typical with most things in financing these days, there are asterisks attached to that answer and stipulations must be met in order to do so.  

     The following 3 options are the most commonly applied methods of monthly Mortgage Insurance avoidance.  I recommend that any Chicagoland Borrower considering their use have a long, detailed conversation with me  (elsewhere your own Lender) to determine the pros and cons of each application and use.  

     1.  Piggyback/Second Mortgages:  These loans are often used in high-end housing markets where the proceeds of a Second Mortgage are used as a part of the Down Payment. 

     This method allows the Borrower to essentially place a 20% Down Payment on a purchase of a home via a Second Mortgage.

     If a Borrower has a 10% Down Payment available:  The Borrower can utilize a HELOC (Home Equity Line of Credit) for the remaining monies needed (10%)  to make a full 20% Down Payment on the purchase price of a home ... the level at which Mortgage Insurance is avoided.  This, of course, results in a second Mortgage Payment, which ideally is less than their Mortgage Insurance monthly payment would have been.  

     The concept of using this option is to:  Have the combination of the lower 1st Mortgage amount (aided by the use of the 2nd Mortgage), plus the lack of monthly Mortgage Insurance, result in a lower total monthly Mortgage Payment.

     2.  For those Borrowers uninterested in a Second Mortgage, but do NOT have a 20% Down Payment:  Mortgage Insurance (in some form or another) is still a requirement in most all cases.  

     But ... a lump sum one-time prepayment of monies, in what's called a "Single-Premium Mortgage Insurance" arrangement is possible.  This Single Premium Payment option is a one-time payment at Closing.  It's made in addition to the other Closing Costs needing to be paid by the Borrower.

     This method is most often utilized when Borrowers have the funds to do so, or must keep the Monthly Mortgage Payment at an "Approvable Debt-to-Income Ratio".  

     Note:  Seller-paid Closing Costs can also be used to "single pay", or help offset, the Mortgage Insurance. 

     3.  Lender-Paid Mortgage Insurance:  This option includes an Interest Rate that is higher than the normally available Interest Rate for the Borrower.  The higher rate charged helps THE LENDER to pay for the Mortgage Insurance.  As a general rule of thumb, this option is less desirable for those intending to own that same mortgage for 10 years or longer.

     Again, all of the above options require in-depth analysis prior to any decision being made.  

     If a Borrower, take the time to ask your LO questions regarding each option.  Gain a thorough, detailed explanation as to their application in your individual borrowing scenario before coming to any conclusions or taking action.

     And remember, if I can help in any way, please contact me with your questions or needs ...  




    
     * Hoping to Buy or Refinance a Home in New Lenox or elsewhere in the Chicagoland area?  Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:



Gene Mundt

Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed

American Portfolio Mortgage Corp.
nmls #175656


Direct: 815.524.2280

Cell or Text: 708.921.6331

eFax: 815.524.2281


  Twitter Account of Gene Mundt, Mortgage Lender   LinkedIn Account of Gene Mundt, Mortgage Lender   Facebook Acct. of Gene Mundt, Mortgage Lender   Pinterest Acct. of Gene Mundt, Mortgage Lender   
 Trulia Acct. of Gene Mundt, Mortgage Lender   Zillow Acct. of Gene Mundt, Mortgage Lender        Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender 

Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 

Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 

and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 
Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 
Cook County, and elsewhere within IL & WI.


Referrals are Appreciated and Welcomed!








    
        


     

      

Considering Buying a Home? You Need to Check-Out my Mortgage Wish List First

Considering Buying a Home? You Need to Check-Out my Mortgage Wish List First As a Grampa, I'm very aware of "Wish Lists&qu...