Quote:
Originally Posted by Rick Lee
Well, I have a FICO well into the 700's, 13 yrs. of perfect mortgage history and - ta da - I'm about to get an FHA loan. Yeah, I'm a real deadbeat.  FHA loans have Mortgage Insurance Premium (MIP), not Private Mortgage Insurance (PMI). And it's partially refundable when you refi out of FHA or even streamline refi into another FHA with a perfect payment history. Yeah, I did that once or twice with my first house.
There's nothing new about FHA. I think it's been around since the New Deal. If anything, FHA suffered a serious decline when subprime got big. I'd say they're a pretty good deal these days. Without them the real estate crash would last a LOT longer while people save up 10-20% for a conventional loan down payment. That might not be a bad thing. But a lot my cash is tied up in my Virginia house now, where I did put 20% down, but can no longer tap because it's now an investment property. So I need to go FHA. Pretty sure their money is safe with me. |
MIP is the government version of PMI.
I'm not saying FHA is new, it's just a current continuation of subprime lending. The are a good deal to borrowers, not to the people who back the loan. FHA died when you could get a loan at 100% LTV with no PMI. Now you can't so the same risks are going on with FHA loans.
Would you lend me 97% of the value of a house I didn't even live in where values are declining? No, and I wouldn't lend it to you either. Even if your credit score came back at 851.