Correction

December 07, 2003

The Nov. 30 Mailbag contained incorrect information regarding Federal Housing Authority loans and how the FHA addresses mortgage insurance.

FHA's Homebuyer Savings Plan reduced the upfront premium requirement on loans closed on or after Jan. 1, 2001.

For these loans, FHA's monthly premium is eliminated when the loan-to-value ratio reaches 78 percent, provided the borrower has paid these premiums for at least five years.

For FHA-insured mortgages with original terms of 15 years and shorter and with original loan-to-value ratios of 90 percent or greater, the monthly mortgage insurance premium will be canceled automatically when the loan-to-value ratio reaches 78 percent, regardless of how long the borrower has paid the premiums.

Mortgages with original terms of 15 years and shorter and with loan-to-value ratios of 89.99 percent and less will not be charged monthly FHA mortgage insurance premiums.

Borrowers with FHA-insured loans closing before Jan. 1, 2001, may receive a refund on upfront premiums paid when they sell their homes or refinance their loans.

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