As promised, on April 5th, 2010 the FHA Up Front Mortgage Insurance Premium (UFMIP) will go up from 1.75% to become 2.25%. This increase is said to be designed to rebalance the risk management that FHA takes by delivering low down payment loans, and the cost of doing so in the current market. The truth is that new buyers will now be paying a bit extra to help rebuild the financial backing for the popular program, as the current default rate has taken its toll. Just how much more are new home buyers paying after the 5th? Well, on $300,000 loan the difference is $1500. The amount can still be financed which translates into about $8/mo for a 30yr loan with a 5% note rate. Some say that difference is well worth it if it keeps the FHA program alive for those who need it.
Can you avoid this increase? Yes. For FHA case numbers established prior to the April 5th, the older UFMIP rate will apply with certain restrictions.
Jeremy BeckGreenHouse Group, Inc858-863-0262