@jamevfan wrote:
I was preapproved for a FHA at 300,000. After selections and designer center our total came out to 267,000 we have the 3.5% down payment and the actual closing costs but dont want to exhaust all funds at closing. What will happen regarding interest rate and overall loan if we put the closing costs and UMIP in the loan? Has anyone done this?
The lender is paying the title fees
There are 4 ways for buyer/borrower closing costs to be paid:
- Buyer pays
- Seller pays
- Lender pays
- combination of buyer, seller and lender pay
Normally the buyer pays their own costs at closing. In a normal purchase, both the buyer and the seller have closing costs to pay. The borrower closing costs are based on the amount borrowed and the type of mortgage. The seller closing costs are based on the sales price.
In order for the seller to pay for some or all of buyer/borrower closing costs, the amount has to be specified in the purchase and sale contract. That specification can be a percentage or a dollar amount. The loan type and LTV dictate the maximum amount allowed to be paid by the seller on the buyers' behalf. Lets say you have the seller pay $5000 of your closing costs and pre-paid expenses, then the $5k is written into the contract and deducted from the seller's proceeds at closing.
If you have the lender pay some or all of your costs due at closing, the lender has to increase the interest rate on your loan to get the funds to pay your costs. This is referred to as a premium par rate (higher than market).
UFMIP is an exception to the above. It is added to the base amount of your mortgage without increasing your rate. Most FHA borrowers add the UFMIP to their loan rather than pay it at closing. There is no impact to your interest rate to add this UFMIP fee to your loan balance.
