Get Ready.Â If you are an FHA borrower NOW is the time to buy and close!!!!
FHA is planning to take several administrative actions to strengthen the new books-of-business to ensure the long term health of the MMI Fund.Â One of these actions will be to revise the current premium cancellation policy.Â Within the first quarter of the new year, FHA expects to announce the following change:
Automatic Cancellation of MIP
- Â For any mortgage with an original principal obligation â‰¤ 90% LTV, FHA will assess MIP for the first 11 years of the mortgage, for all mortgages regardless of their amortization terms.
- Â For any mortgage with an original principal obligation > 90% LTV, FHA will assess MIP for the duration of the mortgage or for the first 30 years of the term, whichever occurs first.
This basically means that if you put down less than 10% You will have mortgage insurance for as long as you have the FHA loan!
If you put down over 10% you will have mortgage insurance for a minimum of 11 years!
We do not know the exact date this will go into effect but it is COMING!Â Personally I think this is terrible.Â Do I think FHA will is a bad loan now?Â Yes, for long term absolutely.Â Charging mortgage insurance the life of the loan is insanity and GREEDY. Â Is it still a great loan to get your foot in the door?Â Absolutely
Bottom Line: FHA is still a great loan to get your foot in the door.