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PMI or FHA, which is the cheaper option for homeowners?

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Mortgage Professional America | 03 Dec 2014, 12:38 PM Agree 0
The FHA's fees have more than doubled since the bust and now with more relaxed lending standards in effect, homeowners could save up to $12,000 with PMI, according to WalletHub data.
  • Mick | | 03 Dec 2014, 01:18 PM Agree 0
    When are 3% down conventional mortgages available again? None of our lenders have sent us any info on this?
  • Bob CMC | | 03 Dec 2014, 05:02 PM Agree 0
    The FHA program has shot itself in the foot. Maybe this was intentional? I have originated mortgages for 30 plus years and have always loved this program. It can really help first time buyers who are struggling to come up with a down payment. As a mortgage officer I will do everything in my power to avoid the FHA program for my borrowers. The article fails to mention the Upfront Mortgage Insurance (UMIP) of 1.75% of the base mortgage amount in addition to the Monthly Mortgage Insurance (MMI). Having said this there are times where their is no other choices. A couple of quick examples: if I have to push debt ratio's the FHA program is the only game in town. If the borrower has sub-par credit scores the FHA is the only choice. There are other reasons as well but they are too numerous to list (not trying too write an article her). It's too bad that the agencies or private markets have not come up with any other low down payment options. They will eventually. You can count on it!
  • Rachel Norvell | | 04 Dec 2014, 07:25 AM Agree 0
    Bob,
    Thank you for your input. You're right in that those were left out of the article. The FHA program still has a lot of advantages to it, especially for first-time home buyers with subpar credit scores. We're working on an article that delves more into the differences of PMI and FHA program that I think will speak more to the qualifications for each program. Hopefully it will be something to share with your clients!

    Thanks for reading!
    -Rachel
  • | | 09 Dec 2014, 10:15 AM Agree 0
    FNMA, FHLMC conventional mortgages, especially with LPMI are by far becoming the most popular.If anything, the competitive edge of LPMI vs BPMI has provided a new market for conventional mortgages. FHA, USDA and VA mortgages are hands down the next most affordable, even with increased MIP and PMI.
    All mortgage types mentioned above have better rates than non-QM portfolio product that is alternative. Positive: non-QM mortgages no longer have damaging pre-payment penalty, neg amortization or balloons that were common in the past. Because there is no pre-payment penalty on any mortgages mentioned above, mortgage originators have prime opportunity to refi non-QM if borrowers who can't fit into GSE or govt. mortgages. And once acceptable LTV, credit score or ratio is attainable to do a conventional mortgage, FHA can be refi'd into conv.
    This is the way it should have been all along.
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