Mortgages In The U.S

Morning all :wave:

Hope everyone is okay

New on the blog is a guide to seven different types of mortgages in the U.S :house_with_garden:

Really interesting to see how they differ from the mortgages we have here in the UK :blush:

Read the full guide here: and drop any comments you have below!

As with anything, the details are a bit more complicated. FHA loans require Private Mortgage Insurance (PMI).

However, FHA loans before 2013 have their PMI removed once the LTV reaches 78% (and the loan is at least 5 years old). But loans after 2014 have PMI for the life of the FHA loan - so typically most will refinance to a conventional loan once they have 20% equity and remove the PMI.*

Note that PMI is not the same thing as home owner’s insurance. PMI protects the lender if the borrower defaults, vs. home owner’s insurance protects the home owner from disasters like a fire or natural disasters.

*Another trick to remove PMI before the law change for FHA loans was to take out a second mortgage once 5 years was reached and the LTV was not yet 78%. The second loan would reduce the first loan to 78%, remove the PMI, and be an overall savings. Except, this meant the home owner was much more extended and didn’t really have 22% equlity and more likely to default. The law change was to try to help clean up much of the home loan defaulting.