Sunday, May 15, 2011

WHICH IS BETTER FHA OR CONVENTIONAL FINANCING?

Is FHA still the best way to go? I was recently asked this same question when the subject of PMI insurance came up. The monthly risk premium on FHA increased from .9% of the base loan amount to 1.15%. This marks a 27% increase from last year and 130% increase from three years ago. With many conventional programs offering no PMI insurance with a slightly higher interest rate, the total monthly payment is less than loans with PMI insurance. Is it better to go back to conventional financing?

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