It was only a few months ago that HUD increased FHA’s Upfront Mortgage Insurance Premium (UFMIP) from 1.75% to 2.25%.
HUD will now decrease the UFMIP down to 1.0%, but will increase the monthly mortgage insurance amount from .55% to .90%.
Let’s see how this truly pans out, assuming you finance the UFMIP into your loan amount.
Current Way:
$400,000.00 purchase with 3.5% down payment:
$386,000 Base Loan Amount + Financing the 2.25% UFMIP = $394,685 Total Loan Amount, assuming 5.0% 30 Year Fixed (APR 5.080%) = $2118.75
Mortgage Insurance = $180.90
Property Taxes: $416.67
Homeowners Insurance: est. $80.00
TOTAL: $2796.32
New Way, Effective September 7, 2010:
$400,000.00 purchase with 3.5% down payment:
$386,000 Base Loan Amount + Financing the 1.0% UFMIP = $389,860 Total Loan Amount, assuming 5.0% 30 Year Fixed (APR 5.080%) = $2092.85
Mortgage Insurance = $178.69
Property Taxes: $416.67
Homeowners Insurance: est. $80.00
TOTAL: $2769.21
So it doesn’t change your bottom line too much, but if you end up paying the UFMIP out of pocket and not finance it into the loan amount, this will increase your monthly Mortgage Insurance payment by nearly double.
