Thursday, May 16, 2013

Mortgage Insurance changes on FHA loans to Take Effect June 3, 2013

Thinking of Getting an FHA Loan?  Changes to Mortgage Insurance requirements on FHA loans are coming as of June 3, 2013.

Mortgage Insurance (MI) is a premium paid by borrowers who don't meet certain minimum equity requirements, like not putting at least 20% down so your loan to value (LTV) is over 78%. It used to be that after you reached 78% equity in your home you could cancel the MI. Not so any more. If your LTV starts at 90% or more, you will have to pay MI for the duration of your loan, even if you go below 78% equity. Considering a benefit of FHA loans is that they allow borrowers to put down only 3.5%, it means pretty much all FHA borrowers will have to pay more mortgage insurance.

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