FHA vs Conventional Financing

By
Real Estate Services with Capital City Mortgage Investments, Inc Since 1994

With FHA’s new rates in effect,
conventional financing becomes an even better choice.

Compare FHA's new monthly premium to what CCMI Mortgage can offer borrowers with credit scores of 720 and higher: FHA will be helpful those with crecit scores below 640 but FHA monthly MI rates go even higher in April. See my next post.

90% LTV 95% LTV

FHA .85% MI
through CCMI Mortgage .49%

FHA .85% MI
through Mortgage .67%

FHA vs. Conventional loan example:

95% LTV
  FHA Conventional FHA Mortgage Advantages over FHA MI
Assumptions:
Purchase price = $250,000;
Term = 30 years;
Interest rate = 5%; FICO = 720
FHA upfront premium (financed into the loan amount): 1%
Monthly MI Premium rates: 
FHA = 0.85%; 
MI = 0.67%
Monthly mortgage payment includes P & I plus MI premium
All other closing costs are equal
0% home appreciation
Base Loan Amount $237,500 $237,500  
Upfront Premium $2,375 $0 No upfront premium
Total Loan Amount $239,875 $237,500 Lower loan amount
P & I $1,288 $1,275  
Monthly MI
Payment
$167 $133  
Monthly
Mortgage
Payment
$1,455 $1,408 Lower mortgage payment
3-Year MI Costs $8,298 $4,774 Lower MI costs
Home Equity after 3 Years $21,295 $23,559 Greater equity

Notes:  In this example, Lower conventional MI rates available with an upfront premium and FHA declining renewal premiums were applied; numbers and calculations were rounded to the nearest dollar and may vary slightly from actual results. The example is for illustrative purposes only and does not in any way guarantee specific premium rates or approval for a loan. Mortgage insurance premium rates are subject to availability in each state, individual state laws and licensing requirements.

MI premiums vary by MI company and are determined by the LTV, credit score, and loan purpose. Even if the MI partner selected for the transaction has a higher mortgage insurance factor than what is illustrated above, the borrower(s) still have the benefit of having no upfront premium to be paid.

 For complete mortgage insurance eligibility contact us For information use by wholesale loan originators, real estate professionals and builders only.

 Issued: 01/11

Posted by

Thanks,

Peter


404-643-4793

 

Providing financing for cities across Georgia including: Acworth, Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Avondale Estates, Blairsville, Bloomingdale, Blue Ridge, Bogart, Brunswick, Buckhead, Buford, Canton, Carrollton, Cartersville, Chatsworth, Clayton, College Park, Columbus, Commerce, Conyers, Covington, Cumming, Dahlonega,  Dacula, Dalton, Dawsonville, Decatur, Doraville, Douglasville, Duluth, Dunwoody, East Point, Fayetteville, Flowery Branch, Gainesville, Greensboro, Hampton,  Hapeville, Hinesville, Hiram, Jackson, Jefferson, Jonesboro, Kennesaw, Lagrange, Lawrenceville, Lilburn, Lithia Springs, Macon, Madison, Metter, Morganton, Morrow, Newnan, Norcross, Oakwood, Peachtree City, Pooler, Richmond Hill, Riverdale, Rome, Roswell, Sandy Springs, Savannah, Scottdale, Statesboro, Stockbridge, Stone Mountain, St Marys, Sugar Hill, Suwanee, Thomasville, Thunderbolt, Tucker, Tybee Island, Valdosta, Waleska, Warner Robins, Waycross, Wilmington Island, Winder, Woodstock, and many more.

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Rainmaker
387,323
Sarah & Lester Oswald
Broker, Realtor, CDPE, CIAS, SFR , Investor
Eastvale Team Realty & Property Mgmt

I like how you compared the equities accumulated after 3 years.

February 16, 2011 09:14 AM
Rainmaker
405,885
Randy Ostrander
Real Estate Broker, Serving Big Rapids and West Central MI
Lake and Lodge Realty LLC

FHA is not that great of an option. Good to see they are trying to help...the recovery.

February 16, 2011 09:31 AM
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Peter Bright

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