[quote=carlsbadworker]But couldn’t the FHA borrowers just refinance after LTV drops below 78% to conventional loan?[/quote]
IF and when someone with an FHA loan gets to 20% equity, who knows what rates will be at that time OR if they will be able to qualify for a non FHA loan.
**There is a very high % of people with mortgages today that cannot qualify to refi to a lower rate for one reason or another. Regardless of equity, income, credit score or assets. They are stuck.
The govt programs like HAMP, HARP, CRAP & PIMP only helped a small % of people.
Taking on a new FHA loan today is going to cost a small fortune over the life of the loan.
The compounded cost will be huge. If the same ‘extra’ MI dollars were used to pay down principal, it would reduce the interest paid by tens of thousands of dollars over the life of the loan.
Most people wont care
IMO if FHA didn’t exist and at least 10%-20% down was required to ‘buy’ a house, prices would be a lot lower and less people would be ‘homeowners’.
This is not what the govt. wants!
