December 10, 2019

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Articles Tagged With: UFMIP

FHA Mortgage Insurance Refunds

Is There Such A Thing As A Refund For FHA UFMIP Mortgage Insurance?

Is there such a thing as a refund for FHA Up-Front Mortgage Insurance or FHA UFMIP? This mortgage insurance premium is required on FHA loan transactions and must be paid either in cash at closing time or must be financed into the loan amount. FHA loan rules do not allow a borrower to pay a portion and finance a portion of the FHA UFMIP, it must be paid in full using financing or cash. Borrowers have many questions about this FHA mortgage insurance requirement, including whether or not a refund is possible under the right circumstances. FHA forward mortgages require UFMIP as a condition of the loan no matter if the transaction is an FHA One-Time Close construction loan, existing construction purchase, or whether the borrower is buying a manufactured | more...

 
FHA Loan Rules: Using Rental Income to Qualify for a Mortgage Loan

Can You Refinance An FHA Loan To Get Rid Of PMI?

We’ve been discussing home loans, mortgage insurance, and the differences between FHA home loans and conventional mortgages. One common question that comes up when comparing FHA loans to non-FHA options? “Can you refinance an FHA loan to get rid of PMI?” The proper answer to this question is that FHA loans do not require PMI, also known as Private Mortgage Insurance. That does not mean the borrower won’t be required to pay for mortgage insurance, but for FHA loans this is an expense factored into the mortgage payment as part of the loan transaction. The borrower is required to make an FHA Up Front Mortgage Insurance Premium payment as part of closing costs (it can be financed into the loan if the borrower chooses) and make a monthly mortgage insurance | more...

 
What Can I Rehab With An FHA 203(k) Mortgage?

Do I Need FHA Mortgage Insurance?

In a recent blog post we discussed the differences between FHA mortgage loans and conventional home loans. One of the most important differences between FHA mortgages and conventional loans is the mortgage insurance requirement. Conventional loans may, depending on the size of your down payment and other factors, require the borrower to put as much as 20% down. Those who do not put a certain percentage down on a conventional mortgage may be required to carry private mortgage insurance (also known as PMI). FHA home loans, on the other hand, require a minimum 3.5% down payment and have no private mortgage insurance requirement. However, FHA mortgages do require the borrower to pay for mortgage insurance. This requirement includes an Up Front Mortgage Insurance Premium (UFMIP) and a monthly payment (MIP). | more...

 
FHA Loans And Natural Disasters: What You Should Know

FHA UFMIP Refunds: A Reader Question

Is the FHA Up Front Mortgage Insurance Premium or UFMIP refundable? A reader got in touch with us in the comments section this week to ask us a question in that area: “Is there any return of the UFMIP when refinancing out of an FHA loan to conventional? If so, what is the proration amount or percentage of fees refunded? over 6 months, 12 months, 18 months, 24 months?” This insurance premium on FHA mortgages is refundable under a specific set of refinance loan circumstances, but not for all loans. FHA loan rules in HUD 4000.1 address the issue directly; on page 156 we learn the following: “The UFMIP is not refundable, except in connection with the refinancing to a new FHA-insured Mortgage.” HUD 4000.1 states that Up Front Mortgage | more...

 
How much can I borrow with an FHA refinance loan?

UFMIP: FHA Loan Rules

Since we have gotten several questions lately about FHA loan rules regarding funding fees including the FHA Mortgage Insurance Premiums (MIP) and Up Front Mortgage Insurance Premiums (UFMIP), it seemed like a good idea to discuss the rules in HUD 4000.1 regarding these issues, starting with the UFMIP. For FHA single-family forward mortgages, the rules for the Up Front Mortgage Insurance Premium are found on HUD 4000.1 on page 155. It begins with the explanation of both UFMIP and MIP: “FHA collects a one-time Upfront Mortgage Insurance Premium (UFMIP) and an annual insurance premium, also referred to as the periodic or monthly MIP, which is collected in monthly installments.” Some borrowers have questions about whether or not you can finance the UFMIP and how doing so might affect the amount | more...

 

FHA UFMIP: A Reader Question

A reader asks, “I want to purchase at home for 141,000 and I am paying the 3.5 down payment which totals it 136,065. How much will I pay in Up Front mortgage and annually MIP. If I pay the UFMIP in closing will it still be added into to total amount loan?” Let’s begin with a few basics. UFMIP stands for Up Front Mortgage Insurance Premium, which is required as one of the closing costs of an FHA mortgage loan. According to HUD 4000.1, “Most FHA mortgage insurance programs require the payment of UFMIP, which may be financed into the Mortgage. The UFMIP is not considered when calculating the area-based Nationwide Mortgage Limits and LTV limits.” That last sentence means that your loan limit is unaffected by the amount of | more...

 
Happy Columbus Day 2019

FHA Loans and Cash Back

FHA home loans have specific rules about when a borrower can get cash back on an FHA transaction and how. In general, FHA mortgage loans for new purchases don’t permit cash back except in the form of legitimate refunds, but HUD 4000.1 outlines certain circumstances where a small amount of cash back is permitted. However, that cash back cannot be “excessive”. A lender is required to estimate the costs of the loan before the actual expenses are tallied. These estimates could result in the borrower budgeting more than is required. When money is due back to the borrower, HUD 4000.1 states: “When the estimated costs utilized in calculating the maximum mortgage amount result in greater than $500 cash back to the Borrower at mortgage Disbursement, Mortgagees may reduce the Borrowers | more...

 

FHA Loan Mortgage Insurance Premium Rules

When you purchase a home using an FHA mortgage, you’ll be required to pay an Up Front Mortgage Insurance Premium (UFMIP) and and monthly mortgage insurance premium (MIP). The rules governing this mortgage insurance are found in HUD 4000.1 and it’s important to know them before you start budgeting and planning for your new mortgage. FHA loan rules covering this insurance begin by defining terms. “FHA collects a one-time Upfront Mortgage Insurance Premium (UFMIP) and an annual insurance premium, also referred to as the periodic or monthly MIP, which is collected in monthly installments.” One thing important for borrowers to know is that the FHA does not consider these payments to be part of the mortgage guaranty limit–this is a fee assessed after those limits are calculated, even though the | more...

 
FHA rehab loan

FHA Loans And The Up Front Mortgage Insurance Premium (UFMIP)

FHA loan rules published in HUD 4000.1 include instructions to the lender on how FHA single family mortgages are to include the Up Front Mortgage Insurance Premium, also known as UFMIP. This is an expense borrowers should plan and budget for in the pre-application phase of preparing for an FHA mortgage loan. Borrowers can choose to finance the UFMIP or pay the cost at closing time. The UFMIP is not to be confused with the monthly mortgage insurance premium, also known as MIP, or private mortgage insurance commonly called PMI. According to HUD 4000.1: “FHA collects a one-time Upfront Mortgage Insurance Premium (UFMIP) and an annual insurance premium, also referred to as the periodic or monthly MIP, which is collected in monthly installments.” Of UFMIP, the rulebook says that “most | more...

 
Mortgage Loan Rate Trends

FHA Loan Mortgage Insurance Termination

One commonly asked questions about FHA home loans involves when a borrower is permitted to terminate FHA-mandated mortgage insurance. There is a difference between FHA mortgage insurance premiums and private mortgage insurance–borrowers with questions about private mortgage insurance will need to contact the insurance provider. But for FHA mortgage insurance, there are rules in HUD 4000.1 that govern when such the coverage may be cancelled. These rules are found in Section III Part A, which includes the following: “A Mortgage Insurance Termination is the ending of FHA Single Family mortgage insurance at which time the Mortgagees obligation to remit MIP to HUD ends. Upon termination, the Borrower and Mortgagee will enjoy only those rights, if any, to which they would be entitled under the National Housing Act if the insurance | more...