What is the catch with the FHA loans?

[SDEngineer]

[quote=j]I believe there is no PMI on FHA loans.[/quote]

It’s not called PMI, but it’s there, and I believe it’s mandatory on all FHA loans which are above 90%LTV and greater than 15yrs (i.e., any 30 year product, no matter the LTV, requires the FHA mortgage insurance). I believe that it can be removed after 5 years if/when the LTV drops below 80%, but for the first 5 years, it’s mandatory.

The MIP (mortgage insurance premium, the FHA’s version of PMI) right now for the 3.5% down FHA mortgage (the minimum down payment FHA mortgage) is 0.55%/yr. However, the FHA also requires the borrower to pay an upfront mortgage insurance fee (which is the source of the FHA’s high costs compared to Fannie/Freddie conforming loans) of 1.75% of the mortgage amount.

In other words, FHA is quite expensive fee-wise compared to a conforming loan. However, it is about the only way to get a low-down mortgage these days from what I’ve been able to find. Given the state of the economy, I can easily understand why a lot of people are willing to pay the extra fees to keep more of their own cash available (in fact, I will probably be buying in the next year, and am leaning towards going the FHA route for just that reason – I can afford 10% down, but it would seriously deplete my cash reserves, and in this economy, I’d rather keep those reserves just in case – it’s the difference between having 9 months of cash reserves, and 3 months).

[HLS]

Mortg Insurance depends on which company the lender puts you with, and it is based on a combination of your credit score and LTV.
FHA insurance with low down is the most expensive premium there is.

I can’t quote exact premiums, but with a high credit score and a 90% loan, on a $540,000 loan my guess would be $250-$300 a month.

SDE, At this time, I still have one solid lender that offers FNMA 95% financing (5% down) for high credit scores. I think the minimum score needs to be 720.

FHA @ 3.50% down 1.75% upfront fee is a sucker’s bet.

I still believe that many people are fooled into getting FHA loans, incorrectly thinking that it is their only option OR that it is a better loan for them.

It’s sad that consumer ignorance is exceeded by mortgage advisor ignorance.

It’s a feeding frenzy right now, and the hungry mortgage sharks are eating people alive who are shopping only by rate.

It’s a sad statement that people believe lies and are wary of the truth…. HLS

[HLS]

Mortg Insurance depends on which company the lender puts you with, and it is based on a combination of your credit score and LTV.
FHA insurance with low down is the most expensive premium there is.

I can’t quote exact premiums, but with a high credit score and a 90% loan, on a $540,000 loan my guess would be $250-$300 a month.

SDE, At this time, I still have one solid lender that offers FNMA 95% financing (5% down) for high credit scores. I think the minimum score needs to be 720.

FHA @ 3.50% down 1.75% upfront fee is a sucker’s bet.

I still believe that many people are fooled into getting FHA loans, incorrectly thinking that it is their only option OR that it is a better loan for them.

It’s sad that consumer ignorance is exceeded by mortgage advisor ignorance.

It’s a feeding frenzy right now, and the hungry mortgage sharks are eating people alive who are shopping only by rate.

It’s a sad statement that people believe lies and are wary of the truth…. HLS

[HLS]

Mortg Insurance depends on which company the lender puts you with, and it is based on a combination of your credit score and LTV.
FHA insurance with low down is the most expensive premium there is.

I can’t quote exact premiums, but with a high credit score and a 90% loan, on a $540,000 loan my guess would be $250-$300 a month.

SDE, At this time, I still have one solid lender that offers FNMA 95% financing (5% down) for high credit scores. I think the minimum score needs to be 720.

FHA @ 3.50% down 1.75% upfront fee is a sucker’s bet.

I still believe that many people are fooled into getting FHA loans, incorrectly thinking that it is their only option OR that it is a better loan for them.

It’s sad that consumer ignorance is exceeded by mortgage advisor ignorance.

It’s a feeding frenzy right now, and the hungry mortgage sharks are eating people alive who are shopping only by rate.

It’s a sad statement that people believe lies and are wary of the truth…. HLS

[HLS]

Mortg Insurance depends on which company the lender puts you with, and it is based on a combination of your credit score and LTV.
FHA insurance with low down is the most expensive premium there is.

I can’t quote exact premiums, but with a high credit score and a 90% loan, on a $540,000 loan my guess would be $250-$300 a month.

SDE, At this time, I still have one solid lender that offers FNMA 95% financing (5% down) for high credit scores. I think the minimum score needs to be 720.

FHA @ 3.50% down 1.75% upfront fee is a sucker’s bet.

I still believe that many people are fooled into getting FHA loans, incorrectly thinking that it is their only option OR that it is a better loan for them.

It’s sad that consumer ignorance is exceeded by mortgage advisor ignorance.

It’s a feeding frenzy right now, and the hungry mortgage sharks are eating people alive who are shopping only by rate.

It’s a sad statement that people believe lies and are wary of the truth…. HLS

[HLS]

Mortg Insurance depends on which company the lender puts you with, and it is based on a combination of your credit score and LTV.
FHA insurance with low down is the most expensive premium there is.

I can’t quote exact premiums, but with a high credit score and a 90% loan, on a $540,000 loan my guess would be $250-$300 a month.

SDE, At this time, I still have one solid lender that offers FNMA 95% financing (5% down) for high credit scores. I think the minimum score needs to be 720.

FHA @ 3.50% down 1.75% upfront fee is a sucker’s bet.

I still believe that many people are fooled into getting FHA loans, incorrectly thinking that it is their only option OR that it is a better loan for them.

It’s sad that consumer ignorance is exceeded by mortgage advisor ignorance.

It’s a feeding frenzy right now, and the hungry mortgage sharks are eating people alive who are shopping only by rate.

It’s a sad statement that people believe lies and are wary of the truth…. HLS

[Scarlett]

[quote=SDEngineer]

Given the state of the economy, I can easily understand why a lot of people are willing to pay the extra fees to keep more of their own cash available (in fact, I will probably be buying in the next year, and am leaning towards going the FHA route for just that reason – I can afford 10% down, but it would seriously deplete my cash reserves, and in this economy, I’d rather keep those reserves just in case).[/quote]

Thanks, SDE, I think we are in the same boat…about looking at buying next year with 5% down, 10 if that’s impossible… Being a knife-catcher, but being serious, I struggled hard to make all my payments on my previous home and as a result I didn’t save anything… Hey, I didn’t know I could be bailed out! 🙂
Now, I am slowly buliding up, I have a better job and I am renting, but I’d hate to dump all this hard-earned cash in a down payment.

I know that this low to no downpayment played a major role in this housing market mess, but I would like to see more lenders giving 95% financing with good rates if the applicants have excellent credit scores and well-documented enough income (debt-to-gross income ratio of 28-33%)…I know quite a few people that were in my situation and got out just in time , with “affordable” losses. So now they have little if any savings for a future downpayment. They make good income, have as stable jobs as one can hope for so they would so they are able to afford the monthly payment, but not the down payment. They seem they will be left out of the housing market – even if you save $1000/mo for downpayment only, it takes at least 7-8 years to save 100K -which is 20% of a relatively modest (depending on the area) home of 500K.

[Scarlett]

[quote=SDEngineer]

Given the state of the economy, I can easily understand why a lot of people are willing to pay the extra fees to keep more of their own cash available (in fact, I will probably be buying in the next year, and am leaning towards going the FHA route for just that reason – I can afford 10% down, but it would seriously deplete my cash reserves, and in this economy, I’d rather keep those reserves just in case).[/quote]

Thanks, SDE, I think we are in the same boat…about looking at buying next year with 5% down, 10 if that’s impossible… Being a knife-catcher, but being serious, I struggled hard to make all my payments on my previous home and as a result I didn’t save anything… Hey, I didn’t know I could be bailed out! 🙂
Now, I am slowly buliding up, I have a better job and I am renting, but I’d hate to dump all this hard-earned cash in a down payment.

I know that this low to no downpayment played a major role in this housing market mess, but I would like to see more lenders giving 95% financing with good rates if the applicants have excellent credit scores and well-documented enough income (debt-to-gross income ratio of 28-33%)…I know quite a few people that were in my situation and got out just in time , with “affordable” losses. So now they have little if any savings for a future downpayment. They make good income, have as stable jobs as one can hope for so they would so they are able to afford the monthly payment, but not the down payment. They seem they will be left out of the housing market – even if you save $1000/mo for downpayment only, it takes at least 7-8 years to save 100K -which is 20% of a relatively modest (depending on the area) home of 500K.

[Scarlett]

[quote=SDEngineer]

Given the state of the economy, I can easily understand why a lot of people are willing to pay the extra fees to keep more of their own cash available (in fact, I will probably be buying in the next year, and am leaning towards going the FHA route for just that reason – I can afford 10% down, but it would seriously deplete my cash reserves, and in this economy, I’d rather keep those reserves just in case).[/quote]

Thanks, SDE, I think we are in the same boat…about looking at buying next year with 5% down, 10 if that’s impossible… Being a knife-catcher, but being serious, I struggled hard to make all my payments on my previous home and as a result I didn’t save anything… Hey, I didn’t know I could be bailed out! 🙂
Now, I am slowly buliding up, I have a better job and I am renting, but I’d hate to dump all this hard-earned cash in a down payment.

I know that this low to no downpayment played a major role in this housing market mess, but I would like to see more lenders giving 95% financing with good rates if the applicants have excellent credit scores and well-documented enough income (debt-to-gross income ratio of 28-33%)…I know quite a few people that were in my situation and got out just in time , with “affordable” losses. So now they have little if any savings for a future downpayment. They make good income, have as stable jobs as one can hope for so they would so they are able to afford the monthly payment, but not the down payment. They seem they will be left out of the housing market – even if you save $1000/mo for downpayment only, it takes at least 7-8 years to save 100K -which is 20% of a relatively modest (depending on the area) home of 500K.

[Scarlett]

[quote=SDEngineer]

Given the state of the economy, I can easily understand why a lot of people are willing to pay the extra fees to keep more of their own cash available (in fact, I will probably be buying in the next year, and am leaning towards going the FHA route for just that reason – I can afford 10% down, but it would seriously deplete my cash reserves, and in this economy, I’d rather keep those reserves just in case).[/quote]

Thanks, SDE, I think we are in the same boat…about looking at buying next year with 5% down, 10 if that’s impossible… Being a knife-catcher, but being serious, I struggled hard to make all my payments on my previous home and as a result I didn’t save anything… Hey, I didn’t know I could be bailed out! 🙂
Now, I am slowly buliding up, I have a better job and I am renting, but I’d hate to dump all this hard-earned cash in a down payment.

I know that this low to no downpayment played a major role in this housing market mess, but I would like to see more lenders giving 95% financing with good rates if the applicants have excellent credit scores and well-documented enough income (debt-to-gross income ratio of 28-33%)…I know quite a few people that were in my situation and got out just in time , with “affordable” losses. So now they have little if any savings for a future downpayment. They make good income, have as stable jobs as one can hope for so they would so they are able to afford the monthly payment, but not the down payment. They seem they will be left out of the housing market – even if you save $1000/mo for downpayment only, it takes at least 7-8 years to save 100K -which is 20% of a relatively modest (depending on the area) home of 500K.

[Scarlett]

[quote=SDEngineer]

Given the state of the economy, I can easily understand why a lot of people are willing to pay the extra fees to keep more of their own cash available (in fact, I will probably be buying in the next year, and am leaning towards going the FHA route for just that reason – I can afford 10% down, but it would seriously deplete my cash reserves, and in this economy, I’d rather keep those reserves just in case).[/quote]

Thanks, SDE, I think we are in the same boat…about looking at buying next year with 5% down, 10 if that’s impossible… Being a knife-catcher, but being serious, I struggled hard to make all my payments on my previous home and as a result I didn’t save anything… Hey, I didn’t know I could be bailed out! 🙂
Now, I am slowly buliding up, I have a better job and I am renting, but I’d hate to dump all this hard-earned cash in a down payment.

I know that this low to no downpayment played a major role in this housing market mess, but I would like to see more lenders giving 95% financing with good rates if the applicants have excellent credit scores and well-documented enough income (debt-to-gross income ratio of 28-33%)…I know quite a few people that were in my situation and got out just in time , with “affordable” losses. So now they have little if any savings for a future downpayment. They make good income, have as stable jobs as one can hope for so they would so they are able to afford the monthly payment, but not the down payment. They seem they will be left out of the housing market – even if you save $1000/mo for downpayment only, it takes at least 7-8 years to save 100K -which is 20% of a relatively modest (depending on the area) home of 500K.

[Scarlett]

[quote=HLS]
with a high credit score and a 90% loan, on a $540,000 loan my guess would be $250-$300 a month.

SDE, At this time, I still have one solid lender that offers FNMA 95% financing (5% down) for high credit scores. I think the minimum score needs to be 720.

HLS[/quote]

Thanks HLS, I wish there would be more lenders willing to do FNMA 95% financing! With good credit score, carefully documented income etc. of course.
See my post above… I have the same concerns as SDEngineer…

-Scarlett

[Scarlett]

[quote=HLS]
with a high credit score and a 90% loan, on a $540,000 loan my guess would be $250-$300 a month.

SDE, At this time, I still have one solid lender that offers FNMA 95% financing (5% down) for high credit scores. I think the minimum score needs to be 720.

HLS[/quote]

Thanks HLS, I wish there would be more lenders willing to do FNMA 95% financing! With good credit score, carefully documented income etc. of course.
See my post above… I have the same concerns as SDEngineer…

-Scarlett

[Scarlett]

[quote=HLS]
with a high credit score and a 90% loan, on a $540,000 loan my guess would be $250-$300 a month.

SDE, At this time, I still have one solid lender that offers FNMA 95% financing (5% down) for high credit scores. I think the minimum score needs to be 720.

HLS[/quote]

Thanks HLS, I wish there would be more lenders willing to do FNMA 95% financing! With good credit score, carefully documented income etc. of course.
See my post above… I have the same concerns as SDEngineer…

-Scarlett

[Scarlett]

[quote=HLS]
with a high credit score and a 90% loan, on a $540,000 loan my guess would be $250-$300 a month.

SDE, At this time, I still have one solid lender that offers FNMA 95% financing (5% down) for high credit scores. I think the minimum score needs to be 720.

HLS[/quote]

Thanks HLS, I wish there would be more lenders willing to do FNMA 95% financing! With good credit score, carefully documented income etc. of course.
See my post above… I have the same concerns as SDEngineer…

-Scarlett

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