Upfront Mortgage Insurance Increase for FHA Refinance Loans
The fha refinance mortgage loan program is a wonderful option for many borrowers that either have less than perfect credit or those refinancing a high loan-to-value ratio (LTV) for their home loan. Yet, there is one cost with an fha refinance that can add up to some serious bucks, and that is call the Upfront Mortgage Insurance Premium or UFMI. For the past several years, the UFMI was set at around 1.5 percent of the borrower’s total loan amount. That went up last year to 1.75 percent for fha refinancing homeowners. Now in 2010, the UFMI is set to increase once again to 2.25 percent of the refinancing homeowners total mortgage amount.
You can consider it just the cost of doing business with the fha. There are many home loans that will only qualify under the fha refinance program, so if it creates a nice benefit for the borrower, then the UFMI is well worth the investment. Remember that the UFMI is paid upfront and included the refinance closing costs for the borrower’s mortgage. You can pay for this out of pocket at closing, or as most refinancing homeowners do, just roll it in to the total loan amount.
That 2.25 percent can be quite substantial although. For instance, if you are refinancing a $250,000 loan amount, the UFMI applied to refinance closing costs will be $6,250. That is nothing to sneeze at. You must take the UFMI into consideration for home mortgage refinancing total costs when determining if the fha refinance is the right fit to meet your refinancing goals.
