FHA Insured Mortgage Loan And MIP

FHA mortgage insurance premium is a large portion of your monthly mortgage payment.  For a 30 year fixed rate mortgage loan with a 3.5% down payment, the annual FHA mortgage insurance premium is 1.35% of the balance of your FHA insured mortgage loan for the life of the FHA loan.  If you were to put 4% down payment on a 30 year fixed rate FHA insured mortgage loan, your annual FHA insured mortgage premium drops to 1.30% for the life of the FHA insured mortgage loan.  With 30 year fixed rate FHA insured mortgage loans, you cannot cancel the FHA mortgage insurance premium no matter what loan to value it is.  New FHA guidelines were implemented on June of 2013.  For those who want to save on FHA mortgage insurance premium, they can opt to consider a 15 year loan where there are some options in saving FHA mortgage insurance premium for qualified mortgage loan borrowers.

15 Year FHA loan

If you choose to pick a 15 year FHA loan and can put 10% down payment, you can get some leeway with regards to FHA mortgage insurance premium.  The first advantage is that your annual FHA mortgage insurance premium will get reduced from 1.35% of your mortgage balance to 0.45% of your mortgage balance.  For 30 year FHA loan programs, the FHA mortgage insurance premium is effective for the life of the FHA insured mortgage loan.  However, on 15 year FHA loan programs your mortgage insurance premium can be cancelled after 11 years from the closing of your 15 year FHA loan if and only if your loan to value is at 78% loan to value or lower.  Prior to April of 2013, 15 year FHA loan programs did not have any FHA mortgage insurance premium required.

15 Year FHA Loan Versus 30 Year FHA Loan

Prior to April, 2013, there was no FHA mortgage insurance premium required on 15 year FHA loan program.  Now, your FHA mortgage insurance premium will cancel and you do not have to pay monthly FHA mortgage insurance premium after 11 years if your loan to value is at 78% or less.  As mentioned earlier, FHA mortgage insurance premium is 1.35% of the FHA mortgage balance amount every year for the life of the loan if you put 3.5% down payment on a 30 year FHA loan,  However, if you put a 5.0%down payment on a 30 year FHA loan, your FHA mortgage insurance premium reduces slightly to 1.30% of your mortgage balance for the life of the loan.  If you put a 10% down payment on a 15 year FHA loan, your FHA mortgage insurance premium drastically reduces to 0.45% of your mortgage balance for the life of the 15 year FHA loan plus after 11 years, you can cancel your FHA mortgage insurance premium if your loan to value is at 78% or lower.

Mortgage Rates On 15 Year FHA Loan Are Lower Than 30 Year FHA Loan Programs

15 year FHA loan program mortgage rates are substantially lower than 30 year FHA loan programs.  Normally, 15 year FHA loan mortgage rates are 0.50% lower than 30 year FHA loan mortgage rates.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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