A reminder, for new home loans, that FHA mortgage insurance becomes forever starting June 1st. Up to this time, once your loan was reduced by 20% you could have your mortgage insurance removed. As of June 1st, for new home loans only, your monthly mortgage insurance premium will be set for the life of your loan. The reason is, FHA was designed to help first time home buyers get into a home by allowing relaxed underwriting rules. Over the years FHA has evolved into the loan for everyone. That’s not what they wanted. So by putting on mortgage insurance for the life of the loan, their hope is that once folks reach that magic 20% in equity they will refinance to a conventional loan and drop off the mortgage insurance. This will free up more money for FHA to loan to new home owners. But it’s not too late, you can still lock in the current mortgage insurance program by completing a loan application to either buy a home or refinance a current one prior to June 1st.
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