How FHA Mortgage Insurance Works

[Mortgage Guide]

The FHA helps people out who need assistance because of low income issues. The FHA is a part of the Department of Housing and Urban Development or HUD for short. When you get a FHA loan for a home, you will need insurance.

This may not be the case if you put a 20% or greater down payment on the home yourself. Insurance with the FHA is actually really cheap and is nothing to worry about. Insurance with an FHA loan is only 0.05% per year.

You will have to pay 1.5% upfront for the insurance though to get it started. In comparison to insurance from other companies, the FHA is a real bargain. If you have been thinking about getting an FHA loan for a while but have been worried about the insurance, don't be. FHA multi family insurance is cheap and affordable just like the FHA loans are. That is the FHA's goal, to help you get housing, even if you can't afford a typical loan payment.

[cabernay00]

What happens if you have an FHA loan and still can't afford it??

[tedi055]

Well i think your right about the FHA insurance being very cheap. i might be mistaken about the insurance stopping after you pay more than 20% of the home value (80 LTV) but i though that FHA required the borrower to pay mortgage insurance trough out the entire life of the loan.

[Do_the_math]

FHA upfront mortgage insurance was increased to 2.25% on purchases and .55% annually for loan to values at or greater than 95%. HUD is seeking to lower the upfront premium and increase the annual premium. The change in premium structure is to offset losses in the FHA portfolio.

HUD Mortgagee Letter 2010-02:

http://www.hud.gov/offices/adm/hudcl...es/10-02ml.pdf

Testimony of FHA Commissioner Stevens May 2010:

2010-05-13/U.S. Department of Housing and Urban Development (HUD)

FHA does need to tighten FHA guidelines to eliminate excessive debt ratios that are often obtained through automated underwriting/FHA TOTAL Scorecard, and avoid the failed practice of credit scoring in my opinion.

With that said, I have always loved the FHA program. Even with higher MI premiums, it is still a great program. It is important to discuss the FHA 203k programs (regular and streamline) when buying a fixer-upper, and always discuss an EEM.

[Do_the_math]

Cabernay00, if you have an FHA loan and you can't afford it, you can request a forbearance, modification, or FHA-HAMP modification. If you do a FHA-HAMP modification or a partial claim is involved, you will have to sign a personal note. You can also attempt a pre-foreclosure sale (short sale). If you have a specific scenario you would like answered, please post.

[SillyWorld]

Cabernay00, if you have an FHA loan and you can't afford it, you can request a forbearance, modification, or FHA-HAMP modification. If you do a FHA-HAMP modification or a partial claim is involved, you will have to sign a personal note. You can also attempt a pre-foreclosure sale (short sale). If you have a specific scenario you would like answered, please post.

Umm I been FHA and tried for any kind of Help for last
years, Now finally did my own streamline witha broker and got my own deal, as the whole 2 years Citi just replyed you make to little for any kind of help...??? Or I do not meet FHA Guidelines, and then theres NACA no help whatsoever for 1 1/2 year... Just closed last night 6.75% lowered to 5.25 and told at closing if I make 4 payments on time they will restructure the loan down 1% to 4.25 locked for life of loan

[dtap57]

Sillyworld, Where you behind on your payments? I am also curious about the part where they will locked you in at 4.25 for the life of the loan. That sure doesn't sound to bad IMO. Any info is appreciated.

[SillyWorld]

No never been late since I had the Mortgage, Citi kept wanting me late to get me on a Forbearance when I saw all the peeps in here being on forbearance for months and even a year with late fee's etc...I wanted to keep up as long as I could and kept trying all different places for a Streamline untill one day BOOM, got one that claimed they could get me through and WHAM they did so far...

As far as I asked around we closed last night I am the one that has 3 days to cancle they are stuck with me as long as I had no lies which i did not .

So I looked at it this way I never did forbearance, took out the Streamline no cash out, and to close there was costs (which are all tax deductable) and the costs were no more than $4600.00 added onto what I already owed, but this lowered my monthly only $96.00, which is same or more than I had seen Citi do for many peeps in here..

And if they hold true to me making my 4 payments and they can restructure the interest rate down 1% woo got me hooked.. But lets see how it all goes here next week

[dtap57]

Great Deal IMO! I don't think you can do any better since they are going lower you down another 1% for the life of the loan. Congratulations!