FHA: Insurance premiums for mortgages will no longer be phased out at 78%
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FHA: Insurance premiums for mortgages will no longer be phased out at 78%
Posted by C on 1/31 at 10:10 am
quote:

FHA said it will require most buyers to pay insurance premiums for the life of their loan. A policy that was put in place in 2001 allowed borrowers to cancel premium payments once their debt fell below 78% of the principal balance. One exception will be for borrowers who put more than 10% down at the time of purchase


LINK

This seems like a pretty big deal.



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Posted by Golfer on 1/31 at 10:13 am to C
quote:

This seems like a pretty big deal.



I'm assuming this is for new loans? And this kills any momentum the housing market had, IMO.



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Posted by OnTheBrink on 1/31 at 10:13 am to C
WTF? I have been paying extra until I hit that so I can cancel it. Now, FHA is telling me I will be paying this forever?


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Posted by C on 1/31 at 10:26 am to OnTheBrink
quote:

Now, FHA is telling me I will be paying this forever?


I honestly don't know. I have to imagine it's only for new loans, but the article doesn't go into much detail. I hope someone from the industry will come in with the facts.



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Posted by OnTheBrink on 1/31 at 10:32 am to C
quote:

I hope someone from the industry will come in with the facts.


I immediately sent an email to the two ladies who helped me acquire my loan. I will report back if no one has before then.

Certain statements in it lead me to believe that it is for new loans only, but who knows, like you said, not much detail.

ETA: Just sifting through the comments under the article and one person kind of stated the same thing I did. The comment under it reads:

quote:

It will only apply to those who get loans under the new rules so you should be fine. If you got into a 30 year fixed the terms that you agreed to at closing are the ones that both sides are stuck with for the life of the loan. Remember that you have to pay down the loan below the 78% to get out of the insurance premium. Increases in market\appraised value are not considered when calculating that percentage.


This post was edited on 1/31 at 10:35 am

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Posted by C on 1/31 at 11:21 am to OnTheBrink
quote:

Increases in market\appraised value are not considered when calculating that percentage.


that was not true for a loan I signed back in 2008.



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Posted by Hammond Tiger Fan on 1/31 at 11:25 am to OnTheBrink
This sucks big time for the first time home buyer


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Posted by OnTheBrink on 1/31 at 11:26 am to C
quote:

that was not true for a loan I signed back in 2008.




I guess we will continue to wait for an answer!



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Posted by rmc on 1/31 at 11:26 am to C
quote:

This seems like a pretty big deal.


So what is the point in having mortgage insurance when the balance is 50% LTV? Mortgage insurance lobby is stacked apparently.



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Posted by C on 1/31 at 11:28 am to OnTheBrink
quote:

I guess we will continue to wait for an answer!


Yeah I was pissed when I paid down to that level and chase told me I had to pay an application fee and the reappraisal fee, none of which was reimbursable if the apprasail came back low. At that point I refused to ever do business with them again.



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Posted by bubbz on 1/31 at 12:08 pm to C
Man that's some BS.

I dont remember reading anything about the market/appraisal not having an effect on the pmi ether.



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Posted by GFunk on 1/31 at 12:46 pm to bubbz
Lots of folks who have never and will never flood in their lives that are now helping recapitalize the National Flood Insurance Program. Once its done, they'll probably get rezoned out of the area on new maps.

All I can say is...You voted for it.



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Posted by OnTheBrink on 1/31 at 12:48 pm to GFunk



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Posted by C on 1/31 at 12:51 pm to GFunk
I thought FEMA handled flood insurance; not FHA.




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Posted by dewster on 1/31 at 12:59 pm to rmc
quote:

So what is the point in having mortgage insurance when the balance is 50% LTV? Mortgage insurance lobby is stacked apparently.


50% equity is 50% equity. Requiring mortgage insurance for a homeowner who is so obviously low risk so they can jack up premiums is just as dumb as Obamacare. I understand the point of PMI, but there's no reason it should be mandatory for the life of the loan.

This is going to hurt the housing market and could nearly eliminate the demand for FHA loans.


This post was edited on 1/31 at 1:04 pm

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Posted by Siderophore on 1/31 at 1:01 pm to C
quote:

This seems like a pretty big deal.


It's a HUGE deal.

And largely kills the entire fricking point of an FHA loan.

Everyone with any financial acumen won't buy a house unless they can get it with a traditional loan.

Which is a huge pain in the arse for first time homebuyers.



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Posted by dewster on 1/31 at 1:06 pm to C
quote:

Additional new policies include a requirement that any mortgage for an applicant with less than a 620 credit score and debt-to-income ratio above 43% must be underwritten manually. Lenders who want to issue loans to these applicants must be able to adequately document why they decided to approve the loans.

I actually agree with this.



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Posted by Siderophore on 1/31 at 1:09 pm to dewster
That's fine.

As is maybe tweaking insurance duration (maybe requiring it to 70% rather than 78%

Having it always there is just fricking absurd and is nothing but a money grab



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Posted by Waffle House on 1/31 at 1:11 pm to C
quote:

A policy that was put in place in 2001 allowed borrowers to cancel premium payments once their debt fell below 78% of the principal balance. One exception will be for borrowers who put more than 10% down at the time of purchase


So is this saying that if you put 10% down, once you hit the 78% you can cancel your PMI payments?



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Posted by dewster on 1/31 at 1:13 pm to Waffle House
quote:

So is this saying that if you put 10% down, once you hit the 78% you can cancel your PMI payments?


You don't need to put 10% down for FHA loans, which require PMI insurance.



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