FHA Mortgage Insurance Premium
If you take out a FHA insurance mortgage loan, besides paying an upfront mortgage insurance premium of 1.75%, you need to pay an annual FHA mortgage insurance premium of 1.35% for the life of the mortgage loan. FHA mortgage insurance premium can be a substantial amount for any mortgage loan borrower and eliminating FHA mortgage insurance premium will greatly save any homeowner money that can be allocated somewhere else. The Federal Housing Administration has changed rules concerning FHA mortgage insurance premiums mid last year. Before, a FHA mortgage holder’s FHA mortgage insurance premium was eliminated if the borrower paid on the FHA mortgage insurance premium for 5 years and had at least a 78% loan to value in their home. Now, the FHA mortgage insurance premium is effective for the life of the FHA mortgage loan. The only way out of it is if you either sell your home or refinance your current FHA insured mortgage loan into a conventional loan.
Conventional Loans: Private Mortgage Insurance Requirements
Conventional loans with more than a 80% loan to value require private mortgage insurance. However, with conventional loans, the mortgage insurance is much lower than FHA mortgage insurance premiums. There is no set percentage of the mortgage loan amount like FHA MIP but normally, conventional private mortgage insurance premiums are about half of FHA mortgage insurance premiums. Another advantage of conventional loans is that your private mortgage insurance can be eliminated once your loan to value drops to 80% loan to value. Any borrower who puts a 20% down payment on a conventional mortgage loan purchase is not required to have private mortgage insurance.
Eliminating FHA Mortgage Insurance Premium
We now offer conventional mortgage loans that have greater than 80% loan to value with no mortgage insurance. It is called LPMI, lender paid mortgage insurance, and it is geared towards borrowers with good credit and lower debt to income ratios. This means that anyone with less than 20% equity on their home can now qualify for the LPMI conventional mortgage loan program. Mortgage rates are slightly higher but this conventional mortgage loan program is a phenomenal loan program where FHA mortgage loan homeowners can refinance their current FHA insured mortgage loan and eliminate paying their FHA mortgage insurance premium.
If you are a FHA insured mortgage loan homeowner in Illinois, Florida, Wisconsin, Indiana, or California and are interested in eliminating your monthly FHA mortgage insurance premium by refinancing your current FHA insured mortgage loan into a lender paid mortgage insurance conventional loan, please contact me at 262-716-8151 or at www.gustancho.com.
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