The FHA monthly mortgage insurance that your loan currently has will always remain throughout the term of the loan with FHA case number established after June 3rd 2013.
That’s right any FHA case number established after June 3rd 2013 will have monthly mortgage insurance throughout the term of the loan if you put less than 10% down on a home purchase. Which means you will have that extra payment going to HUD each an every month that you may or may not able to right off in your taxes every year (consult with a tax adviser on this). If you are unsure when you FHA case number was established, call me at 909-503-5600 and I can look that information up for you or email me HERE.
With the monthly mortgage insurance at a factor of 1.35%, on a $300,000 loan amount that is a monthly mortgage insurance payment of $337.50. Image what you can do with that savings once you refinance out of the FHA home loan program. The only way to remove this extra payment is to refinance out into a Conventional type financing.
The FHA home loan program was a great program to purchase the home with if you had limited funds to put down, your credit scores was not strong enough for conventional, did not have the monthly reserve requirements or had a bankruptcy within a 4 year period or a foreclosure in the last 7 years, all of these reason would have forced you to purchase a home utilizing the FHA home loan program.
Now that you are in the home and the equity has increase in your neighborhood, it is time to explore your options to refinance into a Conventional loan. Even if you are at a 90% loan to value, there are options to refinance and not have a monthly mortgage insurance payment. The 2 ways to have a loan to value over 80% and not have mortgage insurance is to increase the rate to buy out the MI or finance the extra fee in the closing cost to ensure you do not have that extra payment.
It is worth exploring to see what options you have, if you remain on the FHA home loan program for the full term on the loan and you were paying the $337.50 a month on mortgage insurance, that would be $121,500 over the life of the loan, big number to look at once you have it on paper. I do not know about you, but I can do a lot of things with an extra $337.50 in the bank.
With the values increasing here in California, you may be surprised that you have the equity in your home to refinance out of the FHA loan program into a Conventional home loan program that has options to rid the monthly mortgage insurance payment. I know you probably just purchased your home and the home loan process may have not been as smooth as you wanted to be and jumping right back this quick may not be something you wish to take on again, but I assure you that that end result will pay off.
It is goal to make every home loan process as smooth and stress free as possible to ensure you have a pleasurable experience with my services. Start the refinance process in mid month so there is time to process your loan where you can miss up to 2 mortgage payments, more savings. With a mortgage payment of $2000 a month, that means an extra $4000 that can be used to pay off debt or attend to a small home improvement project.
It does not hurt to explore this option and start saving on your monthly mortgage payment for the life of the loan. I welcome the opportunity to speak with you about your goals with a refinance home loan at 909-503-5600.
How can I get rid of my monthly mortgage insurance on the FHA home loan that I have?
by Nathan Rufty