Most folks know that FHA requires an Upfront Mortgage Insurance Premium (UFMIP) in addition to the monthly mortgage insurance for a government loan. On Thursday, January 21st, HUD announced an increase of this premium from the current 1.75% to 2.25% for FHA loans for which the case number is assigned on or after April 5th, 2010. Read in full here http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-02ml.pdf regarding this update.
WHAT THIS MEANS TO YOU!
Although the UFMIP is typically financed into an FHA loan (thus the borrower doesn't have to come up with the funds at closing), this increase is worth discussion. Consider a first time home buyer purchasing a $250,000 home with a 3.5% down payment. Their base loan amount is $241,250; total loan amount (including 1.75% UFMIP) is $245,471. After April 4th, the total loan amount jumps up by $1,207 (reflecting the increase from 1.75% to 2.25% UFMIP) to $246,678. In addition to the extra $1,207, their payment increases by $6.48 per month. Use this information to help your clients get off the fence. Ask them, "Why wait until spring if it costs you that much more?" Please visit my website at www.utahloanplan.com for more info or call me directly at 801.983.8211 to discuss.