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Myke Triebold, GRI, LMC

Certified Military Specialist

By Myke Triebold | Agent in Destin, FL

FHA Loans and Food for Thought

FHA financing requires a minimum 3.5% downpayment. FHA financing requires both upfront and monthly mortgage insurance payments. Comparatively, conventional financing can be accomplished with as little as 5% downpayment and only one upfront mortgage insurance payment; no monthly mortgage insurance is required in this instance.

FHA’s upfront mortgage insurance payment is currently 1.75% of the loan value and another 1.25% annualized but paid monthly. Effectively, the borrower is paying 3% of the loan value in the first year alone and 1.25% for years thereafter.

Conventional financing’s required mortgage insurance upfront payment is 2.18% and does not require any future payments. If the borrower has an additional 5% for the downpayment the upfront mortgage insurance fee drops to 1.63%.

Even though FHA’s interest rates average approximately .25% lower than conventional the monthly mortgage insurance payment quickly erodes the appearance of any savings. For example, a borrower would save an approximate $170.00 per month and realize an $11,000 savings over 5 years when considering a $200,000 FHA mortgage versus conventional.

Who then should seriously consider FHA financing as their only via financing option?

• Borrowers with less than a 680 credit score
• Borrowers with a debt to income ration in excess of 45%

I work with very competent loan officers at numerous lending institutions.  For recommendations, contact me at www.DestinHomeRealty.com or MykeSaysSold@aol.com

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