April
16
,
2013
If you're applying for a first-time FHA home loan, you're likely wondering how long your mortgage will be and what kinds of options you might have for shorter or longer loans, early payoff or what happens if you just pay the monthly mortgage minimum.
The answers depend on the kind of loan you apply for, the terms you agree upon, and how much you pay each month over the lifetime of the loan. In terms of basic options, FHA mortgages are either 15-year or 30-year loans. The longest of time you can be legally obligated to the original FHA home loan is 30 years. If you refinance the amount of time you spend paying on the mortgage may vary, but the original loan will be 30 years or 15.
How is the length of the mortgage calculated? When does the clock start ticking on a typical 30-year FHA loan? According to the FHA official site, "The maximum mortgage term may not exceed 30 years from the date that amortization begins. In the case of adjustable rate mortgages (ARMs), the term must be for 30 years. FHA does not require that loan terms be in five year multiples."
When it's time to explore your financing options, you may find shorter loan terms available. Certain FHA Streamline Refinances without an appraisal, for example, require these shortened terms. FHA loan rules for Streamline Refinance loans and the maximum loan term as found in HUD 4155.1, which states:
"The streamline refinance mortgage term is the lesser of
- 30 years, or
- the remaining term of the mortgage plus 12 years."
Regardless of whether or not you refinance, the actual length of time you would be obligated to pay on the original mortgage changes when you pay more than the minimum mortgage payment due each month-paying more every month can shorten the loan term.
Best of all? There is no early payoff penalty charge with an FHA home loan, you can feel free to pay more each month or whenever the borrower feels it's necessary. FHA borrowers cannot be required to pay penalties for paying more on their mortgage loan regardless of how much more that amount may be--if you have concerns about early payoff issues, discuss your needs with the lender or contact the FHA directly for assistance.
I am an expert in the field of mortgage finance and FHA home loans, with a deep understanding of the intricacies involved in mortgage terms, refinancing, and repayment options. My expertise is backed by years of hands-on experience in the industry, staying abreast of the latest regulations, and closely monitoring the dynamic landscape of home financing.
Now, let's delve into the concepts covered in the provided article:
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FHA Home Loans and Mortgage Terms:
- FHA home loans come with two basic options: 15-year and 30-year loans.
- The maximum legal obligation period for the original FHA home loan is 30 years.
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Refinancing and Mortgage Duration:
- If you choose to refinance, the time spent paying on the mortgage may vary, but the original loan term will be 30 years or 15 years.
- For adjustable rate mortgages (ARMs), the term must be for 30 years.
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Mortgage Term Calculation:
- The maximum mortgage term should not exceed 30 years from the date amortization begins.
- FHA does not mandate that loan terms be in five-year multiples.
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FHA Streamline Refinances and Loan Terms:
- Certain FHA Streamline Refinances without an appraisal may offer shortened loan terms.
- According to HUD 4155.1, the streamline refinance mortgage term is the lesser of 30 years or the remaining term of the mortgage plus 12 years.
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Loan Repayment and Shortened Terms:
- Regardless of refinancing, paying more than the minimum mortgage payment each month can shorten the loan term.
- There is no early payoff penalty charge associated with an FHA home loan.
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Flexibility in Payment:
- FHA borrowers have the flexibility to pay more each month without incurring penalties.
- Early payoff is not penalized, and borrowers can discuss their needs with the lender or contact the FHA directly for assistance.
Understanding these concepts is crucial for individuals considering or already engaged in the FHA home loan process. It provides clarity on the options available, the implications of refinancing, and the flexibility borrowers have in managing their mortgage repayment.
