Let’s Talk UFMIP and the FHA?

Written by Michael A. Foote, CMB on . Posted in direct lender, fha mortgage loans

What the heck is UFMIP? Up Front Mortgage Insurance is a fee charged on FHA mortgages in exchange for FHA insuring the mortgage loan. It is the same for every FHA lender no matter how big or small. I guess the best part of the UFMIP is that it can be financed. So even though it can be 1.75% of the loan amount, the fee can be included in your payment. And since many finance up to the limit of 96.5% Loan to Value, the fee relatively speaking, is low, when compared to the risk FHA and the lender is making on the borrower. UFMIP can also be paid for with seller credits, broker credits, and interested third party credits.
FHA lending can be the key to homeownership for some, but as with any mortgage program the devil is in the details. FHA lending is very specialized and in fact FHA loans must be underwritten by a special DE underwriter. These underwriters have their names on the line literally and therefore are a little more conservative than on a traditional conventional loan. Be prepared for some possible additional conditions. But with the help of a direct lender most loans are quite smooth. In todays market FHA loans provide for the least amount of down payment when buying a home except for VA mortgages. With the new 8,000 first time homebuyer credits. Many buyers should take avantage of FHA and their very competitive lending programs