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I bid on a foreclosure today and have been preapproved for an FHA loan.
I know I have to pay mortgage insurance because I don't have 20% to pay down. How long do you pay this? For the entire 30 years or a shorter amount? How can you get rid of it? Refinancing in a few years?
I was thinking and it is too late to call my mortgage consultant.
TIA!
For FHA, the mortgage insurance will go away after 78% of the loan value is paid. It will be a while. It could take about 10 years depending on your loan and if you pay more on the principal. You can re-fi it later to get rid of it.
Also, on FHA it is 78% of the LOAN amount. You also have to pay for at least 5 years and have a good payment history if you want to cancel it early.
With conforming loans, its 78% of appraised value so appreciation helps you to cancel the mortgage insurance quicker. There is also no limit to how soon you can cancel the MI.
FHA does have a lower monthly MI, especially at lower down payments. But it also has an upfront premium that balances that out a bit. Your lender should have gone over a document that explains the difference in MI on conforming and FHA loans.
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