What is mortgage insurance, and how does it apply to FHA loans?
Mortgage insurance is required in order to secure an FHA loan. This insurance money is collected by the lender (the bank, credit union, or savings and loan) and paid to the FHA. If a buyer defaults on their loan, this money is then returned to the lender in the form of insurance against the default. Mortgage insurance costs are typically 1% of the loan total. Until 20% of the equity in the home is paid off, private mortgage insurance may be required, as well. Q: What are the different types of FHA loans? A: There are several different types of FHA Loans and they generally reflect those of conventional loans. There is a fixed rate mortgage loan, which secures an interest rate at the time of purchase and carries it through for the life of the loan. There is also an adjustable rate mortgage (ARM). The interest rate on the ARM fluctuates throughout the life of the loan, mirroring that of the current national index. There is also a graduated payment mortgage (GPM), which requires a down pay
