Please note that FHA is changing the upfront mortgage insurance fee and monthly mortgage insurance fee required on all FHA transactions effective on October 4, 2010.  The changes are as follows:

·         The upfront mortgage insurance fee will decrease from 2.25% down to 1% on all FHA loans

·         The monthly mortgage insurance fee will increase from .55% up to .90% on all FHA loans

The net effect is that it will be more expensive for your clients to buy using FHA financing than currently.

Example:

                                                Current Financing            New Financing

$200,000 purchase           $200,000 purchase

3.5% down                          3.5% down

Loan amount:                    $193,000                             $193,000

Loan amount with MIP: $197,342                             $194,930

Monthly P&I @ 4.5%:     $999.91                                 $987.68

Monthly MI:                       $  90.45                                 $146.20

Total Monthly                    $1,090.36                             $1,133.88

Increase                                                                               $43.52/month