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Don LaPlume

FHA LOAN COSTS UP! Get a lower cost mortgage.

Monday, April 23, 2012 - Article by: Don LaPlume - Emery Federal Credit Union - Message

Yes, the cost of getting an FHA loan is up in two ways.

1. In the government funding fee also know as the Up Front Mortgage Insurance Premium, or UFMIP for short. Before April 9th this fee was at 1% of your loan amount. Now it is at 1.75% of your loan amount. Almost doubling.

2. In the monthly Mortgage Insurance premium AKA - MIP. This is FHA's version of PMI or private mortgage insurance. This fee went up almost 10% and adds to the monthly payment you make on your mortgage. Before this increase FHA's MIP was about the highest in the industry of any type of loan for those with good credit scores.

All that said, FHA is still a great loan for those looking to take advantage of today's incredible interest rates and low home prices. However, there may be a better loan for you. USDA loans have a higher funding fee, currently at 2% but their MIP is almost a quarter of FHAs so your monthly payment is often significantly less.VA loans also have a slightly higher funding fee but no mip at all. This is huge! Like USDA, VA loans also require no money down.Lastly, the old reliable conventional loans are now extremely competitive with FHA as loan as your credit scores are good.You can do a conventional loan with as little as 3% down and No Government Funding Fee. This makes conventional loan costs lower. However, interest rates and PMI on conventional loans are both Very credit score sensitive. So, if your credit is strong this may be your best and cheapest option. If your credit is below a 740 or in most cases below a 720 you will want to use a government loan for your purchase. Please post your questions below if you have a scenario you would like to run by us. We will be happy to guide you through to the best loan type for you.

All my best,Don LaPlume

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