Sir, I think your calculator is broken! My purchase price is $300,000. My down payment is 3.5% which is $10,500. My new loan amount should be $289,500. Why are you showing $296,013?
I'm glad you asked!
FHA has two types of mortgage insurance premiums. Up front and monthly. The combination of the two is what the FHA collects as a reserve to pay for loans that default. We are focusing on up front only.
The Up Front Mortgage Insurance Premium (UFMIP) currently (September 2010) is 2.25% of the loan amount. 300k- 3.5% = $289,500 x 2.25% = $6,513.75. $6,513.75 + $289,500 = $296,013. Any odd change is paid as cash at closing.
This is why a mortgage calculator is a fun toy and not a replacement for a qualified loan officer. I say qualified for a reason: I had a client who told me his buddy got a great deal from this other loan company. The quotes they made were better than anything I saw on rate sheets from banks all over the country so I knew something was wrong.
I called this loan company and acted like one of their customers (sneaky I know!). I asked him the most fundamental question: If my loan should be 289,500 after deducting the down payment, why does your good faith estimate have a higher loan amount? He said I don't know! I'll have to check with the underwriter.
And these folks at this bank are closing loans...SCARY!