I received this email this past week while I was on vacation. Right now I am licensed for loans only in Washington State and I don’t always have enough time left in the day to answer the questions or request for advice that I receive from readers who are located outside of my current “lending boundaries”…although I do try. Sometimes a question or email makes a good post because it may help others who read this mortgage blog.
FHA insured loans have mortgage insurance regardless of down payment or equity until two qualifications are met:
If a borrower elects to make additional payments towards principal, they may request the monthly mortgage insurance payment be removed only after 60 payments have been made with no late payments in the last 12 months.
Whether or not you elect to pay your upfront mortgage insurance as a closing cost (cash) or finance it, is up to you. It will not help expedite the removal of your monthly FHA mortgage insurance.
One of the present benefits with an FHA loan is the ability to refinance without an appraisal. If the market tanks and homes continue to depreciate, as long as you can obtain a rate with a lower rate (the refinance must make sense), you can do an FHA streamline refinance. I say “present” because we are in a climate where guidelines are changing….even for FHA.
Thanks for your question and for reading The Mortgage Porter.
EDITORS NOTE: FHA guidelines for mortgage insurance is changing in 2013. Please check current guidelines.