FHA defaults must have went way up as they are tightening things up considerably. Between the increased insurance costs and requiring collections to be paid the cost of entry to get into FHA has gone up a lot. But if it's what it takes to keep the program solvent it's worth it in the long run. If all we had was conventional as an alternative it would be a lot worse.
@Anonymous wrote:I don't mean to be dense, but when you say the upfront MIP is paid upfront, but rolled into the loan, I get confused. Is it due at closing as one lump sum, or is it also rolled into the loan and broken up into monthly payments? Do I need cash in hand at closing to pay for mortgage insurance?
You can do either. You can either pay it in cash upfront, or you can roll it into your loan.
Starting Score: ~500 (12/01/2008)
@Anonymous wrote:
Walt_K: Great! Thanks.
No problem. With how low rates are, it often makes sense to roll it into the loan especially if you are cash strapped. You're talking about a very small difference in your monthly payment. One reason it can make sense to pay upfront is if you are getting too much back in credits. We were fortunate to get credits that were exceeding our closing costs. Because the downpayment has to come from your funds, we elected to pay the upfront MIP in cash so that we weren't leaving money on the table.
@Anonymous wrote:That's definitely our situation - we are anxious to buy this summer before our daughter starts school, but cash in hand is an issue. Based on income and our DTI ratio, we will qualify for and plan to use the max $271k in our area. We are budgeting appx. $10,000 down to get to the 3.5%, which makes our price point about $281k or less. We are hoping to find a seller willing to pay closing costs and hoping to roll MIP into the loan. In case it doesn't work out as we'd like, we can cough up another 2-3k, but that's about it, as I have a 6-year old CO to Chase (formerly Providian) and 2 Medical Collections for $250 ea. that are 3 years old that I am sure I will have to pay off at closing. Now just hoping we make it across the midscore finish line! Waiting on a couple more credit cards to report as $0 balance after recent payoff and waiting for some almost 2 year old inquiries to drop as well.
Me: 3/27/2012 EQ FICO: 627, EXP FAKO: 654, TU FICO: 677
DH: 3/27/2012 EXP FAKO: 604, EQ FICO: 628, TU FICO: 703
FYI, while inquiries stay on your report for two years, FICO only scores them for the first year. Your score won't change when those inquiries drop. But the improvement in utilization from paying off your CCs should help. Good luck.
