FHA Mortgage Insurance

Mortgage insurance is a policy that protects lenders against losses that result from defaults on home mortgages. FHA loans require

mortgage insurance primarily for borrowers making a down payment of less than 20 percent.

Mortgage insurance is charged to the homeowner each month at the rate of .5 percent per year of the total loan amount. FHA also charges an upfront mortgage insurance premium of 1.5 percent.

FHA's monthly mortgage insurance payments will be automatically terminated when these conditions occur:

• For mortgages with terms 15 years and less and with Loan to Value ratios 90 percent and greater, annual premiums will be canceled when the Loan to Value ratio reaches 78 percent regardless of the amount of time the mortgagor has paid the premiums.
• For mortgages with terms more than 15 years, the annual mortgage insurance premiums will be canceled when the Loan to Value ratio reaches 78 percent, provided the mortgagor has paid the annual premium for at least 5 years.
• Mortgages with terms 15 years and less and with loan to value ratios of 89.99 percent and less will not be charged annual mortgage insurance premiums.

There are many reasons for homebuyers to investigate an FHA home purchase. Your loan is guaranteed by the government, making your application more attractive to lenders. When you decide to apply for an FHA refinance loan, your lender may have a look at your credit rating. This is a source of stress for many, especially those who need to refinance because they risk default or foreclosure on ARM loans or non-FHA loans with variable interest rates.

FHA FORECLOSED HOMES

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