If you’re considering mortgage refinancing with FHA loans there are several things you need to know about today’s best refinance rates. FHA mortgage loans are great if you’re having trouble qualifying for a conventional home loan; however, that extra help from the government comes with a price. Private mortgage insurance (PMI) is required on every FHA loan and is quite costly. Here’s some background on mortgage insurance you need before going through with that FHA mortgage refi.
FHA Loans Require Mortgage Insurance
For FHA loans, you must pay both an upfront mortgage insurance premium, along with an annual mortgage insurance premium. The upfront mortgage insurance premium can be financed or paid as a closing cost, while the annual mortgage insurance premium is typically paid monthly.
The problem with paying for mortgage insurance is that the annual premiums are expensive and do nothing to protect you as the homeowner. PMI does absolutely nothing for you but drain your budget.
Mortgage refinance rates are near a 50-year low now so if you can get a traditional home loan you’ll be better out without mortgage insurance. If you’re a veteran consider a VA home loan for your new home loan as these loans offer many of the same benefits as the FHA loan without the PMI requirement. Another advantage of a VA loan is a streamline refinance when you’re ready for that.
You can learn more about getting the best refinance rates for your next home loan while avoiding unnecessary fees and markup by checking out my free Underground Mortgage Refinancing Videos.