Commonly Asked Mortgage Questions

Our Outer Banks foreclosure specialist Dee Taylor sent in this useful question and answer with local mortgage broker, Jennifer Keenan. 

Mortgage Question and Answer with Jennifer Keenan

Direct:  757.605.4641

Mobile:  757.272.4199

jkeenan@oldpointmortgage.com

www.oldpointmortgage.com

• If I have an FHA loan, how long do I have to keep the mortgage insurance?  Mortgage insurance must be maintained on an FHA loan until your loan-to-value reached 78% (from purchase date) or 5 years, whichever is longer. 
• If I have a conventional loan, how long do I have to keep the mortgage insurance?  A minimum of 12 months, but two ways of removing mortgage insurance on conventional.  The client can order their own appraisal, if the loan is at 80% of value, mail that into the mortgage servicer and request the mortgage insurance be dropped.  Or, the servicer is required to drop the mortgage insurance at 78%.
• The VA program has no mortgage insurance?  That is correct.  VA charges a funding fee that can be added into your loan amount.  There is no monthly mortgage insurance.  Funding fees are 2.15% for first-time use and 3.30% for subsequent use. reduced with down payments.  If a veteran is deemed 10% or more disabled by VA, the funding fee may be waived. 
• What about the USDA Guaranteed Rural Housing Program, do they charge mortgage insurance?  No, USDA operates much like VA.  USDA charges a 3.500% guarantee fee, which can be added into your loan.  There is no monthly mortgage insurance. 
• What is one thing that is new or enhanced about mortgage insurance?  Well, you can now obtain mortgage insurance on second home purchases up to $417,000.  We used to suggest people broke down their purchases into 80% first mortgages with the balance (5-10-15%) on a home equity line of credit, called a "piggyback".  This was all done to avoid mortgage insurance.  Today, it is difficult to find a bank that will loan in excess of 85% total loan-to-value, but mortgage insurance companies will now go to 90% on the purchase of a 2nd home!  So, the next time someone asks you how much they would have to put down on a property, you can once again say with confidence, 10% on a second home.