Saturday, April 3, 2010

FHA Changes effective April 5, 2010

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.

If you do not have a case number on your loan by April 5, 2010, FHA will collect an upfront mortgage insurance premium of 2.25%. 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.

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