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will PMI ever be reduced?

I've heard that PMI is ridiculously high and I am in the market for an FHA loan. Because it's so high, do you think the government will ever do anything to reduce it? by ErikHarken from Sammamish, Washington. Jul 31st 2013 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,623 contributions

It's possible, however I would not hold off purchasing or refinancing right now with the hope that it will get lower anytime soon, becusae thats unlikely to happen.. the MI on FHA loans do not reflect your likelyhood of you defaulting... it's based on all the past default properties which created a large deficit within the coffers of FHA.. the higher MI is there to replenish those coffers... however, just like any goveronment agency, once they catch up, the'll find other ways to spend the extra money rather than lowering the charge to the borrower.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jul 31st 2013
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Adrielle Edwards (AdrielleEdwards)
#905 ranked lender in California - 96 contributions

They may at some point reduce it but I wouldn't count on that happening anytime soon. It is possible to refinance your FHA loan into a conventional loan once you have built up 20% equity in the home, which will get rid of the MI payments.

Jul 31st 2013
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Hi Erik,PMI is pretty high on FHA loans and at this point there is no talk about the PMI being reduced or removed in the future. depending on your Credit score, income level and if you can put at least 5% down a conventional 30-year fixed mortgage with PMI can be much less expensive. You can go to a PMI website such as essent.us or radian.biz to calculate the estimated PMI payment. On a conventional mortgage the PMI is eliminated once the Loan to Value hits 78% whereas with an FHA loan the PMI remains for the entire life of the loan, or until you sell or refinance the home.I hope that helps answer some of your questions.

Jul 31st 2013
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Lorne Harvey (lorneharvey)
#81 ranked lender in Washington - 431 contributions

Hello Erik, I would doubt that HUD will reduce their upfront and monthly mortgage insurance. They keep increasing it. There are other options available if a conventional loan would work for you. I would be happy to discuss options for your consideration. I am here for you if you would like to discuss.Have a great day!Lorne

Jul 31st 2013
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John Moran (TheHomeMortgagePro)
#10 ranked lender in Arizona - 659 contributions

Hi Erik, as mentioned by the other posters, conventional loans also offer plenty of options with less than 20% down. PMI actually refers to private mortgage insurance, which is on a conventional loan. MIP is the term for monthly FHA mortgage insurance premium. As far as your original question goes, I haven't seen any indication of a decrease in either PMI or MIP anytime soon.

Jul 31st 2013
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

Erik - as an FYI - PMI is Private Mortgage Insurance for Conventional Loans and MMI is Monthly Mortgage Insurance for FHA loans. MMI is high right now and today Congress is voting on a measure that will most certianly make it go even higher unfortuneately. If you have at least a 680 fico score you can get a Conventional loan that will cost less than an FHA loan with only 3% down and the PMI is lower than than MMI as well but you need at least a 680 FICO. You can even buy a Homepath home down to a 660 fico and there is NO PMI.

Jul 31st 2013
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Raymond Denton (Raymond)
#10 ranked lender in Ohio - 224 contributions

No.

Jul 31st 2013
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Jason Vondrak (jvondrak)
#217 ranked lender in California - 1,741 contributions

As of right now, no it is unlikely that PMI will be reduced.

Jul 31st 2013
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Kimberly Lawson (kilawson)
#54 ranked lender in Ohio - 150 contributions

I wanted to provide clarification on what was said about FHA mortgage insurance. The monthly mortgage insurance is not forever, IF you put a larger than 10% down payment on a 15 or 30 year note, you would only be required to pay mortgage insurance for 11 years. If you put less than 10% down (FHA), then you would have monthly mortgage insurance for the life of the loan. That's regardless of the reduced loan to value say 5-10 years later. Otherwise if your credit scores are high enough to qualify for private mortgage insurance then yes Conventional has cheaper insurance and you avoid the upfront mortgage insurance, it's only monthly. Beyond that private mortgage insurance (conventional) does still fall off (or you're able to request removal) at 78% loan to value. Best wishes, Kim Lawson, Licensed in Ohio only. Contact and licensing information can be found on my profile.

Jul 31st 2013
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Dave Metsker (DaveMetsker)
#38 ranked lender in Oregon - 2,317 contributions

No, not until FHA insurance fund is healthy again.

Jul 31st 2013
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Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,112 contributions

As of right now it does not look like it and even if they eventually did it would be for any future loans and not past ones. A better option would be to do a 3% down conventional loan, less down payment and no up front mortgage insurance thrown on top of your loan. The monthly MI will be slightly better than FHA, but you will be able to request removal of the mortgage insurance after two years and you have at least 20% equity in your property. You may also have the option to buy out of the mortgage insurance as a one time fee at closing. Talk with a local loan officer and I'm sure they can lead you in the right direction. Best wishes and good luck,

Jul 31st 2013
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Joe Metzler (JoeMetzler)
#19 ranked lender in Minnesota - 3,876 contributions

In the 22-years I've been doing loans, it has gone down and then gone up high to where it is today. Considering they just raised it, it is unlikely to go down anytime soon. With that said, it isn't the end of the world, and the over picture of each client needs to be looked at before saying it is a bad loan. www.Joemetzler.com/fhaloans.htm

Jul 31st 2013
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They just raised it so I doubt they will reduce it anytime soon or ever. They also have made significant changes to PMI as far as how long PMI stays with your mortgage as well.It may be beneficial to go conventional loan because they only have monthly PMI and it is less than FHA loans. FHA loans also have upfront PMI on top of monthly so get hit twice.With conventional loan you need between 3-5% down so it is almost the same as FHA. Feel free to contact me directly with more questions.Dali Vavrekloan officerWA First Mortgage Loan CorpKirkland, WAp:425 351 5363email: daliv@moneytolend.com

Jul 31st 2013
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Derick Condron (rightstartoregon)
#33 ranked lender in Oregon - 598 contributions

I doubt that we are going to see a lowering of the PMI in the near future. Any reduction will probably be negated by the rise in interest rates. We do loans in Washington and would love to look at all your options. There are some conventional private mortgage insurance options that could reduce your monthly payment.

Jul 31st 2013
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Erik -- we have access to the conventional loans that only require 3% down payment. The mortgage insurance on these is only until your LTV reaches78%, and is only monthly, there is no upfront fee like in FHA program. If I can help, please call or email.

Aug 1st 2013
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Chris Caporiccio (chris.caporiccio@wellsfargo.com)
#15 ranked lender in New Hampshire - 31 contributions

Hello Erik, I have many solutions to PMI please contact me to review what can be done for you. Chris.Caporiccio@wellsfargo.com

Nov 4th 2013
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