FHA Loan Articles
News, updates, and explanations to keep you informed.
Up Front Mortgage Insurance Premium Changes for FHA Loans
When buyers are approved for FHA home loans, they are required to carry mortgage insurance. That includes both a Mortgage Insurance Premium (MIP) and an Up Front Mortgage Insurance Payment (UFMIP). The Upfront Mortgage Insurance Premium payments go into an escrow account set up by the U.S. Treasury Department and the funds are used to protect the government in case the borrower defaults on the FHA loan.
In the past the UFMIP on some FHA loans was as low as 1.5 percent, but effective April 5, 2010, the FHA has new amounts for Up Front Mortgage Insurance Premiums on many traditional and refinance loans from the FHA.
All affected FHA loans with case numbers assigned after April 5, 2010 will incur an Upfront Mortgage Insurance premium of 2.25 percent.
This change means an increase in premiums for those looking for purchase money loans, plus existing FHA mortgage holders interested in refinancing. The increase affects FHA-to-FHA and "non-credit qualifying" refinancing.
The FHA says these changes do not affect annual premiums at this time; the latest policy information from the FHA says for traditional and refinance loans, the annual premium is to be paid monthly and is charged according to the length of the FHA loan, and loan-to-value ratio. Check with your loan officer for payment schedule information for your specific FHA home loan. Most FHA loans are affected by the new 2.5 percent UFMIP, but there are a few exceptions.
TITLE I, HECM, AND HOPE FOR HOMEOWNERS
The increase in UFMIP does NOT affect Title I mortgages or Home Equity Conversion Mortgages, also known as HECM loans. Hope For Homeowners loans are also unaffected by the UFMIP increase.
If you have a Section 247 (Hawaiian Homelands), a Section 248 (Indian Reservations) your loan is unaffected by the UFMIP change. Section 223(e) (declining neighborhoods) and Section 238(c) (Military Impact areas in New York ad Georgia) are also unaffected.
HOW DO UPFRONT MORTGAGE INSURANCE PEREMIUMS WORK?
The FHA charges an insurance premium up front, which is equal to a percentage of your mortgage. For purchase money FHA loans and full credit qualifying refinance FHA loans, the amount is 2.25 percent. FHA Streamline refinance loans are also charged a UFMIP of 2.25 percent.
HOPE for Homeowners pay 2.0 percent and Home Equity Conversion Mortgages are also charged 2.0 percent according to the new guidelines.
FHA NEWS and RELATED ARTICLES
When applying for an FHA home loan, some lenders may ask for tax paperwork as part of the application process. Some borrowers may wonder if this is legal, or an acceptable practice for home loans in general.
There are many questions about the official FHA loan rules for occupancy for single-family home loans. According to FHA rules, a borrower must occupy the home purchased with a single-family FHA loan as a personal residence as a condition of loan approval.
After the housing market crisis of the previous decade, many mortgage borrowers found themselves having trouble making their monthly payments. In some cases, borrowers just walked away from the mortgage completely and allowed the home to be foreclosed upo
The FHA has announced it would accept electronic signatures (also known as e-signatures) on several FHA home loan documents. The new policies are found in detail described in FHA Mortgagee Letter 14-03.
Some of your FHA loan closing costs may be financed, and some may--after being negotiated between buyer and seller--be paid by the seller within the boundaries of the FHA loan programís rules. The borrower can also pay some closing costs out of pocket.