Mortgage insurance is a must6 of 9Two mortgage insurance premiums are required on all FHA loans: The upfront premium is 2.25 percent of the loan amount, and the annual premium is 0.55 percent of the loan amount. The upfront premium must be paid when the borrower gets the loan but can be financed as part of the loan amount. The annual premium is paid in chunks of 1/12th of the total along with each month's mortgage payment."The perception is that that sounds expensive," Geist says.However, he adds, borrowers need to compare the FHA-insured loan to a loan that's not FHA-insured (and consequently requires a much larger down payment). In many cases, the FHA loan is still the best choice, he says. Related Articles:Fixing 3 FHA loan snagsFHA allows house flippingFHA loan costs risingWhat to know on FHA loanRelated Links:Low-down-payment loansUsing the mortgage GFEFind a mortgage rateHow to kill a loan closing advertisement
Two mortgage insurance premiums are required on all FHA loans: The upfront premium is 2.25 percent of the loan amount, and the annual premium is 0.55 percent of the loan amount. The upfront premium must be paid when the borrower gets the loan but can be financed as part of the loan amount. The annual premium is paid in chunks of 1/12th of the total along with each month's mortgage payment.
"The perception is that that sounds expensive," Geist says.
However, he adds, borrowers need to compare the FHA-insured loan to a loan that's not FHA-insured (and consequently requires a much larger down payment). In many cases, the FHA loan is still the best choice, he says.
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