All Forum Posts by: Joseph Zanazan

Beginning June 3, 2013, the FHA changed its long-standing Annual MIP Cancellation Policy. The FHA guidelines currently state:

• Loans beginning at 90% LTV or less will pay annual MIP for 11 years.
• Loans beginning at 90% LTV or more will pay annual MIP for the complete loan term.

This means that home buyers using the Federal Housing Administration's 3.5 percent downpayment program will pay annual mortgage insurance for the loan's full 30 years, regardless of whether the home appreciates to the point of having 22 percent equity or more. With the new FHA rules, MIP is forever.

The upfront MIP is FHA's method of hedging their risk when 're offering you a loan product. The strategy that Albert speaks of is the LENDER PAID MORTGAGE INSURANCE option. With this type of financing (LPMI), the lender blends the premium into the rate, thus classifying the PREMIUM as regular INTEREST and not an additional premium. As previously mentioned, unlike a conventional loan, unless you refinance out of your FHA financing down the line, you're stuck with the FHA Mortgage insurance premium that you can't write off, regardless of property appreciation and equity ratios. An LPMI on the other hand however gifts you the ability to write-off the interest you pay on the money you have borrowed. Mortgage premiums on an FHA loans and closing fees on VA loans aren't calculated in your total loan amount when determining how much you are to borrow. Its important as a borrower to keep in mind that your financing ability isn't compromised by these premiums. The good thing about these upfront premiums are two fold.

#1 They act as a cushion on the loan for the initial years of the mortgage when the loan is usually the most profitable for the lender. That cushion gives the bank the security they need to offer the product. The premium usually is a one time thing that will be adjusted based on how much has already been paid and where you're at in the amortization. Any additional FHA or VA refinances will recalculate and recast your upfront premiums or funding fee accordingly. Basically, you pay your new UFMIP with the reimbursement you get from the previous loan you had.

#2 Its true that the premium does get added on top of the original loan amount. Although you're technically responsible for that amount, it never compromises your strength as a borrower to accept credit. The UFMIP is always added on top of the loan amount without bumping you from one LTV category into the next. In other words, assuming everything checks out with your DTI, your processor will build your new loan amount with respect to the appraisal without including the premium into the balance. The premium is a rough addition on top of your maximum borrowing potential.

Different loans are like different medicine. They all exist for a reason, and they can all potentially offer you a cure. The important thing to do is be as educated and aware of your situation as possible so you can make the right decisions.

Loans that are guaranteed by the Veteran Affairs (VA), much like FHA loans, are backed by the federal government (Ginnie Mae). The guarantee can apply from single to multifamily residential property, in other words you can purchase up to a quadriplex if you do currently reside in one of the units. You are absolutely right. A VA loan is a great way for you to obtain advantageous financing if you're currently renting and don't have too much of a down payment. I guess the next step is to find a qualified agent to do some research for you and point you in the right direction. If you have any questions about VA financing, please don't hesitate!

First off, congratulations for even being in a position to shop for a second home. Purchasing a home can be a very trying period in someone's life so feel free to ask as many questions and educate yourself in the process so you can make the most shrewd business decisions. VA financing, within it's guidelines, has been designed and geared towards offering a unique financing strategy that other loans won't be able to such as 100% cash out refinancing and zero down home purchases. This type of financing is usually offered to help kickstart homeownership and the maintenance of a secure livelihood for our veterans, including the ability to cash out and consolidate private debt. This type of credit is by no means the savvy and aggressive financing tool that will present you with the most effective strategy at owning multiple properties. Unless exempt from the fee (10% minimum disability from the VA), each veteran must pay a funding fee to VA in addition to any origination, processing or underwriting fees your broker or lender may charge to transact. The VA streamline, much like the regular VA loans have a higher risk threshold and a less conservative underwriting approach (not unlike conventional financing) and offer a very "pay to play" platform for veterans of the US Military. Shopping for a second home, assuming your ratios and credit qualify, suggests some sort of financial stability and cash flow. Anytime you use healthy ratios and strong credit, you're rewarded with more cost effective credit. Even if you could qualify for as many VA loans as you wanted, they're not always the fastest and cheapest method of financing, so i would suggest exhausting all other financing options first. Speak with a seasoned banker who can help you make the right financing decision by presenting you with all your options. You'll be surprised at what you qualify for and you wouldn't have ever known if you didn't inquire.