TAG | FHA Loan MIP
Starting in April, the Up-Front Mortgage Insurance Premium (UFMIP) has been increased to 2.25% of the loan amount, up from 1.75%. This increase applies to all purchase and refinance transactions, including streamline refinance. This fee was raised by HUD to help address the budget deficit of the immensily popular FHA loan programs.
While the UPMIP is paid at closing, it may be financed into the loan amount so that it does not add quite the increase in closing costs to the borrower. For example: If the original loan amount is $100,000, the new total loan amount after the included UFMIP would be $102,250 and could be financed for 30 years or 15 years, depending on the desired FHA Loan program.
New borrowers who get an FHA Mortgage Loan will soon have to pay a higher initial mortgage insurance premium (MIP). The new premium will be 2.25 percent of the total amount of the loan, up from the 1.75 percent that has been set nearly a year earlier.
In December of 2009, the FHA was insuring 5.8 million homes that had a total loan balance of greater than $750 billion. More than 500,000 of the loans were seriously delinquent and heading toward foreclosure. Many of these bad loans were made in 2007 and 2008 as the market was plummeting.
The initial MIP increase will go into effect this spring.
