Since 2008 home values have slid to incredibly discouraging lows for most California home owners. Many homeowners fell victim to economic challenges as well, resulting in bankruptcies, mortgage defaults, foreclosures and short sales.
For the vast majority however, it’s been a “sit tight and wait it out” kind of real estate market. If evaporating equity wasn’t enough, to add insult to injury, interest rates dropped to historic lows.
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FHA Was The Lesser of Two Evils
In order to take advantage of low interest rates, many homeowners were forced to take mortgages with mortgage insurance, the most popular option being FHA financing.
From 2008 to 2011, private mortgage insurance qualifying guidelines became so strict that FHA, by default, was the lesser of two evils; stay with high rates, or be forced to take mortgage insurance?
During this same period of time, many first time buyers purchased first or second homes as prices plummeted and affordability rose to levels not seen for over 20 years in the state of California.
Many buyers and homeowners that financed prior to 2012 have been hand-cuffed to higher interest rates due to the steady increase of FHA mortgage insurance premiums which risen 6 times since July 2008.
FHA Mortgage Insurance Alternatives
Statewide, California has experienced a 28% year over year increase in median sold home prices, with a 13.7% increase from February to March 2013. As this trend continues, more and more homeowners find themselves in a position to be able to take advantage of lower interest rates.
Those homeowners that have inched up to 20% equity have hit the jackpot – Take advantage of low conventional interest rates without mortgage insurance.
In 2012, Private Mortgage Insurance guidelines began to loosen, making PMI a true FHA BUSTER! In most cases, borrowers may be eligible for private mortgage insurance with a DU approval. What this means is that if you can get a loan approval, you are eligible for private mortgage insurance.
3 FHA BUSTER Programs You Should Know
There are 3 private mortgage insurance options that all borrowers should know if trying to refinance a home with between 3% and 19% equity.
Lender Paid Mortgage Insurance – LPMI is back! This option allows you to take a slightly higher interest rate and completely avoid monthly mortgage insurance.
Single Premium Mortgage Insurance – This program allows you to “buy out” the mortgage insurance by paying a single, up front premium and completely avoid monthly mortgage insurance. Single premium mortgage insurance can also be paid by using seller concessions or a lender credit.
Broadview Community Access – California borrowers making at or below 140% of the area median income may be eligible for discounted mortgage insurance premiums. In some cases, these premiums can be as low as half of FHA annual mortgage insurance rates.
Nothing to Lose But Mortgage Insurance
Let us take the risk out of your research. Tell us your property address and loan details and we’ll return an in depth savings analysis to determine what options might be available to you.