FHA vs MyCommunity

Erik · #1 (**permalink**) 05-09-2007, 05:35 PM

Alright, I'm looking for some opinion on FHA vs MyCommunity programs for 100% purchases. Thoughts? Considerations? Pros & cons?

It seems to me that MyCommunity is a no-brainer for the simple fact that it's a true 100% and has no MIP.

GLOAT · #2 (**permalink**) 05-10-2007, 04:29 PM

If "MIP" is referrin to Mortgage Insurance, you are incorrect on that My Community does have MI, just at a lower level. Ex:

575 on Flex100 carries 35% MI coverage, whereassame score on My Community is 20% MI

95%=30% v. 16%

Erik · #3 (**permalink**) 05-10-2007, 09:45 PM

I actually meant the up-front premium, which is what... 2.25% on properties other than condos for FHA? Something like that.

At any rate, good to know about the lower level of monthly MI on MyCommunity - thanks!

GLOAT · #4 (**permalink**) 05-10-2007, 09:54 PM

To run MI pricing:

MGIC Rate Finder: Calculate Quotes
or
www.genworth.mortgageinsurance.com

It's a shame that the MI companies have so much power. If you have borrwer w/an Approve/Eligible, they'll still receive A- pricing if their score is ,620.

ChiHlava · #5 (**permalink**) 05-11-2007, 09:11 AM

If the client has the funds (3%) & get approved using the DU or LP (both are running files against the FHA Scorecard system) FHA is a better deal up front to the client and you. Priced an Illinois loan last week where 5.875% priced at 101.2 for FHA and 100.45 for MCM.

Up front MIP is financed with FHA, so the that is not a concern to me. The MI is. FHA loans have a 360 payments of MIP at .5% (or 1.5% I forget) per year. MCM loans have standard MI which can be removed when the principal is under 80% LTV. After 24 on-time payments, a borrower can purchase a new appraisal and ask for the lender to waive the MI. Depending on the lender, they do this on the first request. Some lenders canrge a fee (approx. $250) because they will not waive until a review of the appraisal is done.

FHA is not much harder than the Conventional loans, but it is much more detailed work.

Erik · #6 (**permalink**) 05-11-2007, 09:56 AM

Good thoughts, ChiHlava. I agree - FHA definitely has better pricing.

However FHA also restricts what fees can be charged so a lot of times things like processing, tax service and underwriting fees come out of YSP, which to me seems like it sort of evens out the pricing.

Greg · #7 (**permalink**) 05-12-2007, 08:41 AM

FHA 101-

Up front premium of 1.5%
Ongoing MI of .50%/12 per month based on the balance.

I think that is a lender policy on those fees. (Or corespondent rule) In banker world it is about the same as anything else with fees.

I usually pick My Community because it is better for the customer on a purchase. Less fees. True 100% rather than messing with dp assist. Less confusion to the seller and agents. And an easier sale to the seller rather than a 9% concession for someone who is broke and buying a house.

I used to do FHA all the time. Still do. Let me put it this way. If it is over 100k then FHA. If not MCM. (When someone has no money down)

Also now there is a 40yr MCM. LPMI too. FHA is going to release that 100 though.

Erik · #8 (**permalink**) 05-12-2007, 04:09 PM

So why do you have the 100k threshold, out of curiosity...? (thanks, by the way - can always count on Greg for some good perspective)

Greg · #9 (**permalink**) 05-15-2007, 08:13 AM

It is case by case but it seems like when you are under 100k the 9% is harder to negotiate as a concession from the seller.

The real factor is how much equity they have and what they listed it for and whether there is room or not.

Lately I have used MCM over FHA depending on the DU result. I usually give the borrower both and let them choose. Tell them the ins and outs of both.