BIC TIP #1141: An Announcement and an FHA Mortgage Insurance Tip
This one comes with news. The Notorious BIC is now also the Notorious MLO. Stephen Long is a licensed mortgage loan officer, which means he can originate mortgages in addition to coaching brokers as a broker-in-charge. To celebrate, he kicked off a week of lending tips designed to help agents better serve their buyers, starting with a fact about FHA mortgage insurance that surprises a lot of people.
Why a BIC Is Talking About Loans
Brokers do not originate loans, but they live alongside them every day. Understanding the basics of financing helps you prepare buyers, write stronger offers, and spot when a conversation with a lender could open a better path. Stephen’s goal with these tips is to make you a sharper agent, not a loan officer.
FHA Mortgage Insurance Sticks Around
Here is the tip. With an FHA mortgage, a mortgage insurance premium is built into the monthly payment. Stephen points out that for FHA, that premium stays for the life of the loan.
Many buyers assume mortgage insurance automatically disappears once they reach 20 percent equity. That is true for some loan types, which can drop mortgage insurance at that point. Stephen’s warning is that FHA will not simply drop it when you reach that equity mark.
Explore the Options
That does not make FHA a bad loan. It is a great fit for many buyers. But if there is a better option that gets your buyer where they want to go, it is worth looking at. The right move is to have your buyer sit down with a lender who can lay out the options side by side and explain the long-term cost of each.
As the broker, you do not need to have the answer. You just need to know enough to ask the question.
The Practical Takeaway
FHA loans carry a mortgage insurance premium in the monthly payment, and it does not simply drop off at 20 percent equity the way it does on some other loans. When your buyer is considering FHA, encourage a conversation with a lender about all of the available options. And if you need a lender, the Notorious BIC now wears that hat, too.