Mortgage News | Orange County | FHA Loans

Via Rick Underwood, Broker | Owner, TNG Mortgage

Great news!  The housing market is showing clear signs of improvement.  And conventional lenders are hinting that they’re going to start to ease underwriting guidelines.  That being said, a very popular type of loan just became a little more expensive – and is about to become a little more restrictive.

One of the most attractive features of FHA mortgages is the low required down payment.  In fact, the majority of FHA loan programs require only 3.5% down.  The downside is mandatory upfront and monthly mortgage insurance (MI).  On April 1, 2013, the monthly mortgage insurance increased by 5-10% depending upon the loan scenario.  At this time, mortgage insurance on FHA loans remains in place for a finite period of time.  And in most cases, FHA will drop the monthly MI payment after five years, provided the homeowner has at least 22% equity.  However, on most FHA loans originated after June 2nd, the monthly MI will remain for the life of the loan.  So, the only way to eliminate the costly mortgage insurance is to refinance.

Our recommendation: If you have considered refinancing your home, or purchasing a new home, you can ensure this new FHA policy does not increase the lifetime cost of the transaction.  If you know the property you plan to purchase or refinance, we can “lock in” the current FHA pricing – even if you cannot complete your transaction for six months.  Call 714-203-8558 for additional information.



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