Quick reminder regarding the new FHA UFMIP

Lynda - that is correct.  On a $200,000 base loan amount, the up-front mortgage insurance just went up from $3,500 to $4,500.  The difference in payment for that extra $1,000 is $5.68 at a 5.5% rate.  At 6% the payment difference is $5.99.  It's better that the government changed this than the annual mortgage insurance (which the borrower pays monthly) because that would have had a much bigger negative impact on debt ratios and would have meant a lot fewer people qualifying for FHA loans.  On average, the difference in the upfront mortgage insurance premium will cost a borrower about $5 - $9 per month.

As for Damon's comment, I agree about the government screwing up a lot of things, the new GFE comes to mind - it's an absolute nightmare.  The deal is that the FHA insurance fund is far below the statutory limit and needs to be increased.  Doing it this way is much better than raising the annual portion of the mortgage insurance - which I hear they are still considering.  Note to lawmakers - this would be very bad for a recovery since going from a factor of .55 to .85 would eliminate a lot of would be buyers and make it harder for those who do qualify to make their monthly payments.