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Elite Veteran
Posts: 828
  
Location: Back in California | Any realtors or persons working in real estate loans. We are trying to buy a home and we are preapproved for an FHA loan. YES, we have 20% to put down. However, my lender told me that since its an FHA loan we have to carry mortgage insurance for the life of the loan or until we refinance.
Does this sound right? He said this was a new law that was implemented in the middle of 2013. Seems strange because I cannot find anything about it.
Please advise.
Thanks! |
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  That's White "Man" to You
Posts: 5515
| If you have 20% down it isn't very smart to do an fha loan. The rate will be slightly higer and you pay a higher loan fee. If you have the money down do a normal conventional loan, then you do not have to pay PMI. Even with FHA they cannot make you pay PMI once you have the 20% equity needed. That is part of the new QM rules that became effective this month. |
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 Hugs to You
Posts: 7550
Location: In The Land of Cotton | Whiteboy - 2014-01-16 10:04 AM If you have 20% down it isn't very smart to do an fha loan. The rate will be slightly higer and you pay a higher loan fee. If you have the money down do a normal conventional loan, then you do not have to pay PMI. Even with FHA they cannot make you pay PMI once you have the 20% equity needed. That is part of the new QM rules that became effective this month.
Since you are at the bank - when you exceed the 20% mark, do you as the borrower contact your lender to get the PMI off? And, is the 20% calculated on the total amount of the final borrowed price?
Example would be the total amount borrowed $100,000. The loan amount now is $80,000.
Thanks,
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That's White "Man" to You
Posts: 5515
| 3canstorun - 2014-01-16 9:16 AM Whiteboy - 2014-01-16 10:04 AM If you have 20% down it isn't very smart to do an fha loan. The rate will be slightly higer and you pay a higher loan fee. If you have the money down do a normal conventional loan, then you do not have to pay PMI. Even with FHA they cannot make you pay PMI once you have the 20% equity needed. That is part of the new QM rules that became effective this month. Since you are at the bank - when you exceed the 20% mark, do you as the borrower contact your lender to get the PMI off? And, is the 20% calculated on the total amount of the final borrowed price?
Example would be the total amount borrowed $100,000. The loan amount now is $80,000.
Thanks,
The borrower is responsible for contacting the lender to end the requirement for PMI. Usually it is based on the original loan amount. The exception would be if the market is soft with fluxuating values like it was in 2009. In that case they might require a new appraisal. If appraisal came in at $100k your loan cannot exceed $80K, even if you bought the house for $200K 6 months ago. The problem with that is appraisals are not consistent, at all, but it is the best tool available. |
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Married to a Louie Lover
Posts: 3303
| When I sold my house in Michigan and bought my house in Iowa I looked at all lending options. I was told that FHA rules had changed and you did have to carry pmi for the life of the loan.
I went conventional and also had the seller pay my pmi upfront as a closing cost. If you have 20% down then I would go conventional at all costs. |
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 On the Countdown
Posts: 2934
Location: Texas | I just bought a house. Was going to do FHA loan since I didn't have enough to put down. After my lender told me I did qualify for a conventional loan and I figured the PMI for the duration of both loans I opted for the conventional loan. I will save about 70k in the long run. If you have 20% down I would do conventional.
PMI for FHA will stay, Conventional it is gone once 40% (I think, but that doesn't seem right) of the loan is paid.
My insurance and land taxes are included in it montly too. |
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That's White "Man" to You
Posts: 5515
| I just double checked with our Mortgage Compliance Officer. She said that as of June 2013, the PMI does stay in place on FHA loans for the life of the loan. The only way to end it is through a refinance. So yes your loan officer is correct. |
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Hugs to You
Posts: 7550
Location: In The Land of Cotton | Whiteboy - 2014-01-16 12:38 PM I just double checked with our Mortgage Compliance Officer. She said that as of June 2013, the PMI does stay in place on FHA loans for the life of the loan. The only way to end it is through a refinance. So yes your loan officer is correct.
I wonder if this applies to loans that were originated before 2013?
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That's White "Man" to You
Posts: 5515
| 3canstorun - 2014-01-16 11:41 AM Whiteboy - 2014-01-16 12:38 PM I just double checked with our Mortgage Compliance Officer. She said that as of June 2013, the PMI does stay in place on FHA loans for the life of the loan. The only way to end it is through a refinance. So yes your loan officer is correct. I wonder if this applies to loans that were originated before 2013?
Let me check on that. |
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That's White "Man" to You
Posts: 5515
| Whiteboy - 2014-01-16 11:43 AM 3canstorun - 2014-01-16 11:41 AM Whiteboy - 2014-01-16 12:38 PM I just double checked with our Mortgage Compliance Officer. She said that as of June 2013, the PMI does stay in place on FHA loans for the life of the loan. The only way to end it is through a refinance. So yes your loan officer is correct. I wonder if this applies to loans that were originated before 2013?
Originations prior to June 2013 are not required to participate in the PMI rule change. |
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Hugs to You
Posts: 7550
Location: In The Land of Cotton | Whiteboy - 2014-01-17 11:43 AM Whiteboy - 2014-01-16 11:43 AM 3canstorun - 2014-01-16 11:41 AM Whiteboy - 2014-01-16 12:38 PM I just double checked with our Mortgage Compliance Officer. She said that as of June 2013, the PMI does stay in place on FHA loans for the life of the loan. The only way to end it is through a refinance. So yes your loan officer is correct. I wonder if this applies to loans that were originated before 2013?
Thank you. |
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Elite Veteran
Posts: 828
Location: Back in California | Thank you everyone for taking time to reply. I greatly appreciate your input. |
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 Extreme Veteran
Posts: 430
Location: Montana | P23Ranch - 2014-01-16 7:59 AM Any realtors or persons working in real estate loans. We are trying to buy a home and we are preapproved for an FHA loan. YES, we have 20% to put down. However, my lender told me that since its an FHA loan we have to carry mortgage insurance for the life of the loan or until we refinance. Does this sound right? He said this was a new law that was implemented in the middle of 2013. Seems strange because I cannot find anything about it. Please advise. Thanks!
Thats exactly what we had to do, but in 2008, so not new here. We did get it refinaced and no longer pay PMI, and reduced our payment.
Does seem like a rip off, but maybe I dont have a full understanding.
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boon
Posts: 1
| Getting your own house need to consider many things: budgets, place and loads. Many house buyers these days are guaranteed by Federal Housing Administration (FHA) home loans. Is your sale house up to FHA standards? If not, you're missing out on potential buyers. |
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Folks on-line