On April 5th 2010, the Upfront Mortgage insurance premium on FHA loans will increase to 2.25%. Obviously, this will incur more costs for buyers.
Effective for FHA loans for which the case number is assigned on or after April 5,2010. FHA will collect an upfront Mortagage insurance premium (UFMIP) of 2.25 percent. This policy change will increase premiums for purchase money and refinance transactions. This includes the FHA to SHA Streamline refinance.
The current UFMIP is set at 1.75% of the loans amount and is typically included in the loan amount or must be paid in full at closing. As of right now, monthly insurance premiums will refinance as is 1.55%, or lower. The reason for the UFMIP increase is to help FHA reach its reserve requirement set by congress with the increasing default rate, steps are needed to make sure the program can stay healthy with tax payer help.
The increase in the UFMIP is minimal compared the possibility of a monthly Mortgage insurance premium increase the UFMIP is rolled into the loan and does not heavily impact mortgage payments the way an insurance in monthly insurance premiums can.
If you are thinking of buying real estate with FHA financing start before April 5, 2010. The first time or repeat home buyer tax credit is ending soon. With all the changes in loan products, rates, tax, incentives, ask now before it's too late.
I hope this information was informative and helpful. I am here to help you with all of your real estate needs. If you have any questions, please feel free to contact me. Thank You.
Licensed Real Estate Salesperson
4651 Hylan Blvd, S.I. N.Y. 10312
(718) 966-4000 ext. 325