The Federal Housing Administration (FHA) has been around since 1934 as part of the National Housing Act, and has provided many people the opportunity to own a home with little down payment. The minimum down payment required by FHA today is 3.5% of the sale price, a very affordable avenue to any borrower.
Part of the expenses of receiving a loan from FHA is insurance to cover the loan amount (not homeowners insurance). FHA insurance payments include two parts: an upfront mortgage insurance premium (UFMIP) or one-time payment and “annual mortgage insurance premium” which you pay every month.
On April 18th 2011, FHA will be increasing its annual mortgage insurance premiums for new loans submitted on and after that date. The Up Front Mortgage Insurance Premium (UFMIP) of 1% of the loan amount (collected at loan closing) will still remain unchanged.
Ocean Communities is very proud to be able to offer such a great program that has helped so many over the years, but to assist with the rising cost of funds, PLEASE, make sure you know about our CU Promise 97 Program.
CU Promise 97 has features truly designed to help Ocean Communities FCU borrowers save those hard earned pennies. With CU Promise 97, we require just 3% down payment, and there is NO Up Front Mortgage Insurance Premium (UFMIP)! The monthly or annual mortgage insurance premium (which is needed because you are financing over 80% of the value of the home) is stable.
To show you how much the CU Promise Program could save you compared to FHA let’s look at the following scenario:
Purchase Price of a home at $200,000:
FHA – 3.5% down Payment ($7,000) + UFMIP of 1% ($2000) = $9000
CU Promise 97 – 3% Down Payment = $6000
CU Promise 97 would save our borrower $3000.
(Keep in mind there are additional closing costs with both scenarios, however, I did want to compare the area where a lot of the down payment and costs are derived from between the two types of loans.)
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