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.
- 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 ...
I'm easily found at:
Gene Mundt
Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed #216987
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, Channahon,
Romeoville, Naperville, etc.), DuPage County, the City of Chicago,
Cook County, and elsewhere within IL & WI.
Referrals are Appreciated and Welcomed!
