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James Schiller
300 followers -
Serial Entrepreneur with a inextinguishable drive.
Serial Entrepreneur with a inextinguishable drive.

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Recently a well educated sharp friend of mine asked me to please explain why one of President Trump’s first actions as president was to suspend the cuts to mortgage insurances premiums for FHA loans is a good thing? #presidenttrump   #FHAloans  

Now, back to the original question. Why is it a good thing that Trump stopped the reduction of mortgage insurance premiums? FHA loans are generally an easier loan to get approved for because the required minimum down payment is only 3.5% and credit restrictions are less stringent. So borrowers who get an FHA loan are already qualifying on a lesser set of standards than others. If ANYTHING their credit files should be scrutinized more so. If you’re getting a house with only 3.5% down statistics show you’re more likely to walk away from the house because you have less to lose than other do. If you’re being given special exceptions because your credit isn’t up to par that’s a problem already. Poorer credit already shows you have had a history of not paying your bills on time which is probably a reflection on your ability to retain gainful employment or be responsible with money. So why would anyone want to lend money to someone who can’t pay their bills on time, or keep a good job for any length of time, or pay their rent on time? Yes, I know everyone falls on hard times myself included, but that just means you have to wait, you have to save more money, and fix your credit to prove you’re worth the risk.

That said, the FHA takes a mortgage insurance premium (just like a conventional loan does when people borrow over 80% LTV ), in order to off set the losses the lender takes when they have to foreclose on people who do go “belly up”, and can’t pay anymore. Which is more likely to happen with those getting FHA loans. It’s a safety net if you will. Just with any insurance – the premiums are meant to help pay for the losses. So now that I have explained that, it has probably become more clear that if you make the mortgage insurance premium higher instead of reduce it, then there is more money available to cover the losses incurred due to foreclosures and the government (i.e the tax payers) aren’t left holding the bag.

READ ENTIRE PIECE HERE:

http://searchrealestate.co/why-trump-suspending-mortgage-insurance-cuts-is-a-good

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Want to find the best new development with new homes in Mount Pleasant SC? #oysterpoint

http://oysterpointmountpleasantschomes.com/

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If you want to own real estate on Seabrook Island SC you might want to get familiar with the expenses before looking. #seabrookislandscrealestate

http://jamesschiller.com/charleston-sc-golf-real-estate-communities/seabrook-island-sc-for-sale

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