House hunters who want to buy a home with an FHA mortgage must pay a set of costs, including something known in the industry as the Up Front Mortgage Insurance Premium or UFMIP.

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What Does the FHA Reform Act Mean for New Borrowers?

House Resolution 5072, the FHA Reform Act, was passed by a sweeping margin in June. The 406 to 4 vote allows the FHA to change FHA mortgage insurance premiums to "increase the FHA’s capital reserves" according to a press release by the FHA, but also benefits new FHA borrowers, too.

House hunters who want to buy a home with an FHA mortgage must pay a set of costs, including something known in the industry as the Up Front Mortgage Insurance Premium or UFMIP.

This insurance premium is calculated by multiplying the base loan amount by a percentage rate (2.25% at the time of this writing). That amount is due when the buyer and seller close the deal on the home.

For some FHA loan applicants, that up front payment requires some serious budgeting and preparation, but thanks to the FHA Reform Act, some of that up front payment can now be shifted to the annual mortgage insurance premium, giving FHA loan applicants more time to save and make room for the Mortgage Insurance Payment in their budgets.

That’s good news for FHA borrowers affected by the change, but the issue isn’t settled completely. The next stage of the process is for the bill to clear the Senate; Department of Housing and Urban Development Secretary Shaun Donovan seems optimistic that H.R. 5072 could clear the Senate hurdle soon, saying “We look forward to quick action by the Senate on this proposal to encourage responsible homeownership while further reducing risk to the American taxpayer."

At press time no updates were available as to when the Senate might take action on the FHA Reform Act.

FHA NEWS and RELATED ARTICLES

:: What You Should Know About FHA Loan Origination Fees

:: The FHA Short Refinance Option—Help For Non-FHA Borrowers

:: What Does the FHA Reform Act Mean for New Borrowers?

:: FHA Policy Changes You Should Know About

:: Alimony, Child Support and Separate Maintenance--Does it Count as Income?

:: Can I Still Get a First Time Homebuyer's Tax Credit?

:: 2010 BAH Rate Protection

:: Help for Struggling Home Owners from FHA and Homeowner Bailout Plan

:: Up Front Mortgage Insurance Premium Changes for FHA Loans

:: What is the FHA Hardest-Hit Program?

:: Is the Obama Home Affordable Program Open to Those with VA Loans?

:: FBI Issues Scam Warning for Home Equity Conversion Loans

:: How are FHA Refunds Determined?

:: FHA Issues Sanctions Against 120 Lenders

:: FHA Reverse Mortgages: Getting Paid and Paying Back

:: FHA Updates Rules on 2009 Tax Credit and FHA Loan Down Payments

:: FHA Reverse Mortgage Terms and Fees

:: Tax Break Money and FHA Loan Downpayments

:: When Do I Have To Pay Back My FHA Reverse Mortgage?

:: What is an FHA Reverse Mortgage?

:: FHA Home Loans Growing In Spite of Housing Slump

:: What Is RESPA and How Does It Affect My FHA Loan?

:: Does the FHA Owe You a Refund?

:: FHA Home Loans and Property Taxes

:: What is an FHA Energy Efficient Mortgage?

:: The FHA and the Government Crackdown on Loan Fraud

:: What is the Second Lien Program?

:: Prepaying FHA Loans

:: FHA Loan Myths -- The Self-employed and FHA Loan Qualification

:: What is a 'Non-Purchasing Spouse?'

:: Could Down Payment Assistance Programs Make a Comeback?

:: The 2009 First-Time Homebuyer's Tax Credit

:: $8,000 Worth of Great News for First-Time FHA Loan Homebuyers

:: The Obama Mortgage After Five Years of Loan Modification

:: Understanding the Obama Mortgage Questionnaire

:: Mortgage Insurance and the Obama Mortgage

:: What Happens Once I am Approved for Loan Modification?

:: Should I Pay a Credit Counselor to Get Help With An Obama Mortgage?

:: Will the Obama Mortgage Lower My Payments?

:: What You Should Know About Obama Loan Modification

:: FHA Cash-Out Refinancing Changes as of April 2009

:: FHA Streamline Loan Defined

:: Cash Back, Closing Costs and FHA Streamline Loans

:: FHA Streamline Loan Requirements

:: How to Prepare for FHA Streamline Loans

:: FHA Secure Refinancing Cancelled

:: Should I Consider an FHA Refinance Loan?

:: FHA Refinance Questions You Should Be Ready To Answer

:: What Should I Know About the Terms for FHA Refinancing?

:: Credit Rating, Missed Payments, and FHA Refinance Loans

:: Why Should I Consider an FHA Home Purchase Loan?

:: FHA Loans and Your Rights

:: Can I Make an FHA Home Purchase for a "Fixer-Upper"?

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