FHA Loans! What's the difference!

FHA loans require mortgage insurance premium to cover a possible loss to the lender if the property has to be foreclosed and sold. The premium is substantial and eliminating the MIP would reduce the payment considerably.
The MIP must remain in effect for five years but after that, when the balance is 78% of the original purchase price, FHA will release the requirement and your monthly payment will go down. Since amortization is affected by interest rates, the normal time to reach this 78% point could be from 9 to 12 years at today's interest rates.
In the example below, the MIP would be released in 9 years 6 months with normal payments. An extra $100 a month would allow the borrower to reach the release point in 7 years 1 month. To reach the release point in the minimum five years, the borrower would have to make an extra $268.04 per month principal contribution.
Releasing the MIP in this example would save the borrower $177.67 per month. The borrower would also save interest, build equity and shorten the term of their mortgage. Once the MIP is released, the borrower could continue the same payment schedule to further accelerate the debt reduction.
To make some projections on your mortgage, click here.

Alabama Step Up Program

A lot of you may not know but the State of Alabama has a great down payment assistance program called "Step Up Program" that is offered through the Alabama Housing Finance Authority. I know your thinking what's the catch? But it really is a great program available for those that need it. Yes, there are some things you have to qualify for but the restrictions aren't bad and a lot of people actually do qualify.

Here are some of the qualifications.


You can't earn more than $97, 500

You have to take a homebuyers education course and there are only certain amount of fund available. So it is a first come first service basis. You also have to find a lender that participates in the program but you'll find that a lot of lenders participate in the program which makes for great lender options.
Some of the amazing things about the program is that there is no limit to the price of home you buy and its a fixed mortgage that is about the same as the current market interest rate and you make one payment since its combined with your primary mortgage. Some other things that are great about the program is that it doesn\'t matter where the home is! The house qualifies! And you don't have to a first time home buyer!

If your interested in getting more information on the program visit the website.

You can also call the following number to find a participating lender in your area.
1.800.325.2432 or visit www.AHFA.com.