First Time Home Buyers FHA Mortgage InsuranceWhat does First Time Home Buyers FHA Mortgage Insurance cost? Since FHA requires mortgage insurance premium (MIP) on all its loan programs, you cannot avoid this. It will cost you 1.5% of the loan amount to be paid upfront at the closing.
For many First Time Home Buyers, FHA Mortgage Insurance is paid by the seller. Depending on how you negotiate the purchase contract, this could be no out of pocket money for you. However, you need to be aware of this cost since it can affect how much money you need at the closing table.
Then you’ll have a monthly MIP to pay which will be included in your PITI . This is .50% of your monthly payment amount. I tell people to look at it like an increase to your interest rate because in reality that’s exactly what it is. It never goes away until you sell the house or refinance it.
The 1.5% upfront MIP only applies to 1-4 family owner occupied dwellings. Condos will only require the monthly MIP and no upfront MIP.
Since FHA loans are used by mostly first time home buyers, the MIP is usually higher than a conventional loan because it’s considered a higher risk loan. As mentioned above, on a FHA purchase you will be charged 1.5% of the sale price and renewal rate of .50%.
Conventional loans could be as low as .50% (with a 5% or more down payment) and renewals are as low as .30% in subsequent years. When you pay your balance down below 80% on conventional loans it drops off and you do not have to pay MIP any longer.
On FHA loans, the monthly MIP never stops regardless of how much you pay down on the balance of your loan.
If you have any questions regarding these costs, please don't hesitate to contact me or for more information on First Time Home Buyers FHA Mortgage Insurance click here. Or if you feel you have learned enough and want to pre-qualify for an FHA Home Loan , click here to go to our secure online form. It’s our quick application and only takes about 3 minutes to fill it out. After you fill out the form, you'll be taken to a page with a list of documents that you'll need to gather. Please be sure to print out this page! Then you're on the way to finding the best fha home loans available. With your FREE consultation and loan prequalification, you can learn how to get the seller to pay for this first time home buyers FHA mortgage insurance. This can save you the 1.5% insurance cost that is figured on the price of your new home and is paid upfront at closing. On a $100,000 purchase you're talking about $1,500. Once your quick application has been received, The Mortgage Doctor will call you and discuss your options. ________________________________________________________________ |