Showing posts with label pmi. Show all posts
Showing posts with label pmi. Show all posts
Monday
The FHA Mortgage Insurance Premium
FHA mortgage insurance is similar to the private mortgage insurance (PMI) required for conventional mortgages with down payments below 20%, but key differences exist:
Up-front Fees: 1% up-front fee due at closing.
Rate: For fixed rate loans, there is an annual premium of 1.1% to 1.15% of the loan amount per year, divided over 12 months. Variable term MIP rates are 0.25% to .50% per month for 15 year or shorter-term loans.
Removal: FHA MIP is mandatory for the first five years of loans with terms more than 15 years (even if your loan balance reaches 78% of the original home value or sales price. PMI premiums can often be removed if the loan balance is below 80% of current market value. Conventional loans automatically remove PMI when the loan balance falls below 78% of the loan amount.
Exceptions: If you have a loan term of 15 years or less and put down 10% or more of the sales price, the MIP will be cancelled after the loan balance falls to 78% (of the original sales price, or the original appraised value, whichever is less). 20% down on a 15-year loan cancels PMI altogether.
How the MIP Affects Your Loan Decision? Considering that PMI payments do not go towards the principle, or add to the value of the home, most borrowers would choose to avoid paying PMI altogether.
However, It's hard to avoid paying PMI without putting 20% down. IF you have good credit history, and the money to put 20% down, then a conventional mortgage is probably better for you as PMI would automatically be lifted. However, if the down payment is a family loan or a gift, you may not qualify for a conventional loan even with 20% down. In that case, an FHA loan with MIP may be your only option, if you cannot afford the higher payments of a conventional 15-year mortgage.
Saturday
What Does 25 Percent PMI Coverage Actually Mean
Question? What does 25 percent PMI coverage actually mean
Answer: 25 percent coverage actually means that the MI company will pay out 25 percent of the loan amount and total expenses to the lender when a property goes into foreclosure (the file is of course scrubbed for fraud first)
The average MI paid claim is 51,000 dollars.
The government is looking to get rid of Fannie Mae and Freddie Mac. What? And go back to real common sense underwriting????
Fannie Mae and Freddie Mac are publicly traded companies.
Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corp.) were taken over by the government in 2008 after billions of dollars in losses and years of mismanagement.
Fannie was created as a federal agency in 1938 and chartered by Congress in 1968, followed by Freddie in 1970, to increase access to home loans. But they also are publicly traded corporations and -- before their taxpayer bail out -- had a duty to maximize shareholder return.
Those two, divergent missions were criticized as a "fundamentally flawed" business model by the Financial Crisis Inquiry Commission, which was created by Congress to examine the causes of the economic crisis that began in 2007.
Fannie and Freddie loosened underwriting standards leading up to the financial crisis, buying and guaranteeing riskier loans and ramping up purchases of mortgage-backed securities to please Wall Street analysts and "ensure generous compensation for their executives and employees," the commission determined.
With the housing market in turmoil in 2007 and 2008, Fannie and Freddie reported billions of dollars in losses. They were placed in conservatorship under the Federal Housing Finance Agency in September 2008. Since then, the Treasury Department has provided $169 billion to cover their losses (with re payments the net cost to taxpayers is $141 billion). The total could rise to $363 billion, the FHFA said. Other estimates put the total closer to $390 billion.
Still, senior executives at the mortgage giants continue to receive multimillion-dollar salaries. The top six executives received a combined $35 million in compensation over 2009 and 2010.
They are paid as if they are risk takers when really the government is taking the risk!
Fannie and Freddie's future is uncertain right now.
The Obama administration and Republicans in Congress agree that Fannie and Freddie should be. In housing. abolished. In February, President Barack Obama proposed gradually phasing them.
Answer: 25 percent coverage actually means that the MI company will pay out 25 percent of the loan amount and total expenses to the lender when a property goes into foreclosure (the file is of course scrubbed for fraud first)
The average MI paid claim is 51,000 dollars.
The government is looking to get rid of Fannie Mae and Freddie Mac. What? And go back to real common sense underwriting????
Fannie Mae and Freddie Mac are publicly traded companies.
Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corp.) were taken over by the government in 2008 after billions of dollars in losses and years of mismanagement.
Fannie was created as a federal agency in 1938 and chartered by Congress in 1968, followed by Freddie in 1970, to increase access to home loans. But they also are publicly traded corporations and -- before their taxpayer bail out -- had a duty to maximize shareholder return.
Those two, divergent missions were criticized as a "fundamentally flawed" business model by the Financial Crisis Inquiry Commission, which was created by Congress to examine the causes of the economic crisis that began in 2007.
Fannie and Freddie loosened underwriting standards leading up to the financial crisis, buying and guaranteeing riskier loans and ramping up purchases of mortgage-backed securities to please Wall Street analysts and "ensure generous compensation for their executives and employees," the commission determined.
With the housing market in turmoil in 2007 and 2008, Fannie and Freddie reported billions of dollars in losses. They were placed in conservatorship under the Federal Housing Finance Agency in September 2008. Since then, the Treasury Department has provided $169 billion to cover their losses (with re payments the net cost to taxpayers is $141 billion). The total could rise to $363 billion, the FHFA said. Other estimates put the total closer to $390 billion.
Still, senior executives at the mortgage giants continue to receive multimillion-dollar salaries. The top six executives received a combined $35 million in compensation over 2009 and 2010.
They are paid as if they are risk takers when really the government is taking the risk!
Fannie and Freddie's future is uncertain right now.
The Obama administration and Republicans in Congress agree that Fannie and Freddie should be. In housing. abolished. In February, President Barack Obama proposed gradually phasing them.
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