Hey guys, I have a pre-approval for a $157K loan from one the FHA programs: FHA Down Payment Assistance Program. I have a fixed rate of 5.875%. I can;t lock in though until 30 days out but it has been at that rate for a while. No pts. Seller paying closing cost. It seems like a pretty good program. It is not score driven. Just have to have good credit payment history for a year. All outstanding padi debt must be paid.
We bought our home the same way...no pts, no closing, etc. Mortgage co only looked at past year. We locked just before the last big drop in rates, though. Stuck at 7%. Coulda been worse, though. It iis an awesome program. We qulaified for a lot higher than we spent, but that leaves more $ to buy stuff for house with. Housepmnt is only 12% of net income. Like it that way. Congrats!
Thanks guys....this will be my first house so I am glad...I will be HAPPY when I lock and close though.
Thickman, Where did you go for this type of program? I'm pretty clueless about the whole FHA program but know that in the future that's the way hubby and I would like to go... Do you have to contact FHA directly or just find a lender that goes through them?
My realtor works with MetroBrokers in the Atlanta area who uses GMAC fiancing and this was one of their programs.
The greatest disadvantage of FHA home loans is the upfront mortgage insurance premium (MIP). On a 30 or 15 year FHA home loan that equals to 1.50% of the loan amount in addition to the 0.5% annual renewal premium that a borrower will pay for the life of the loan. hmmmm......... So instead of paying 5.875%, you'll actually pay 6.375% Which means for 150,000 loan, you will pay $1020 instead of $971 $17,640 more over 30 years. Right?
True that MIP adds to cost of buying. However it can be taken off. If value of home is 20% higher than loan amount. My Mom just got hers off. She had to get an apprasial ($300) done and send the results to mortgage company. They took off MIP which was costing her $155 a month. MIP was costing my mom almost $2000 a year, but she made about $50,000 in equity. FHA is great getting into your own home because real estate is a great investment in todays market.
There is no Mortgage insurance with my program. It is a straight 30 @ 5.875% to my knowledge. I asked about PMI or mortgage insurance and they said this program has none.
From my understanding it is only needed or rather required in some states nto all.. Such as in Illinois.. you need the PMI.. until you own 20% of your home.. Which is your job to notify the bank when that occurs.. as they will not do so themselves.. So those of you without this PMI crap... You lucky SOB's.. It basically a rip off.. That is why it has been thrown out by so many states.. Its like the banks third way to protect their investment.. You have your own Home insurance incase of fire what have you.. then the property itself is also there to cover your loan incase you run out in the middle of the night.. then we have to pay for another insurance the bank feels it needs.. LOL.. I am tellin ya.. They should just hold a gun on ya, at closing..
MIP with FHA loans is not forgivable until you reach 78% equity - and this is true equity based on purchase price, not equity based on an increase in fair market value.
Marci, thats how I read it at www.hud.gov I understood it to mean you could not "appraise out" of it, and there was a minimum of 5 yrs on a 30 yr loan.
On July 29, 1999, the new Homeowner's Protection Act of 1998, also known as the PMI Act, regarding the cancellation of PMI takes effect. Private Mortgage Insurance (PMI) is required by lenders when a loan is originated and closed without a 20 percent down payment. This insurance protects the lender from default losses in the event a loan becomes delinquent. The PMI Act will enable homeowners with new loans originated after July 29, 1999 and who meet specified requirements to have their PMI canceled. If your loan was issued before July 29, 1999, CONTACT YOUR MORTGAGE LENDER FOR FURTHER INFORMATION ON CANCELLATION OF PMI. The law provides 2 situations in which borrower paid PMI may be cancel - it can be automatic or by request. Lender-paid PMI is excluded from these mandates, but requires an up front disclosure to the borrower about lender-paid PMI. The 2 cancellation situations are: Automatic. In general, when the homeowner's equity position reaches 22 percent of the original value of the property, the mortgage servicer must automatically cancel the PMI. The borrower must be current in making payments for automatic cancellation to apply. Different requirements exist for "high risk mortgage loans, as defined by government-sponsored entities (i.e. Fannie Mae and Freddie Mac). CONTACT YOUR MORTGAGE LENDER IF YOU FIT THIS CATEGORY. By Request. Homeowners can request cancellation of the PMI when their equity position reaches 20 percent of the original value of the property, if they meet certain criteria. CONTACT YOUR MORTGAGE LENDER FOR ITS CRITERIA LIST. Info obtained from http://www.hud.gov/offices/hsg/sfh/res/respapmi.cfm Articles on PMI http://www.hud.gov/assist/siteindex.cfm Just do a search for PMI Hope this helps
