We read your article in The Sun (Aug. 27) regarding mortgage insurance on FHA loans. We weren't really clear about the exceptions section. So here is our situation.
We are assuming an FHA loan ($150,000) at a 7 percent fixed interest rate. The present owners are paying mortgage insurance of $60 a month.
We are also paying the owners $45,000 in cash over and above the loan amount. Is there any way that we can get rid of the extra $60 a month for their mortgage insurance when we are putting that much down on the townhouse?
Dave M. Tancibok
Dear Mr. Tancibok:
Sorry, but you're out of luck. FHA mortgage insurance must be paid for the life of the loan.
When you assume the FHA loan, you have to continue to pay the mortgage insurance, even though the home is worth considerably more than the balance on the mortgage.
In your situation, the extra $60 per month works out to slightly, less than one-half of 1 percent per year on $150,000.
Even with the mortgage insurance, your 7 percent rate compares favorably to today's conventional mortgage rates, which are almost a point higher.
If rates come down to a lower level, you should consider refinancing the FHA mortgage with a conventional mortgage loan, which would not involve mortgage insurance.