Good morning! I was just made aware of a change coming to FHA lending. Anyone needs to know this information.
On June 3rd the MIP (monthly Insurance premium) also known as PMI, will become permanent on all contracts written after June 3rd for all FHA 30 year mortgages with less than 10% down. To the buyer that means it will no longer matter their equity position in the home as the MIP will not drop off when they reach a 20% equity position on all contracts written on or after June 3rd.
The truth is for most buyers, it will not be much of a change. The MIP will be on the loan for the first 9 to 9.5 years before they reach a 20% equity position. The odds are a number of those home owners will be selling or moving before that time expires. That having been said, Most buyers will be in the home after 9 years and there is no reason they should have to pay the MIP for the whole. term of the 30 year loan.
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