How does including mortgage insurance affect my FHA transaction?

Upfront (UFMIP) and annual Mortgage Insurance Premiums (MIP) are available to include on FHA transactions.

Annual Mortgage Insurance Premiums (MIP) are available to include on FHA assumption transactions.

After entering the UFMIP Rate, clicking Calculate will automatically generate a Mortgage Insurance fee for you and will be visible in the Fees section. The fee details of this fee will reflect the settings made in the Mortgage Insurance section. If a change to UFMIP is required, you must update the information in the Mortgage Insurance section. The upfront mortgage insurance premium can only be paid by the borrower at this time.

When selecting Mortgage Insurance Type, the monthly FHA mortgage insurance premiums are calculated on the average annual principal balance, i.e., as the amount you owe on the loan decreases each year, so does the amount of the monthly premium.

Escrowed mortgage insurance is incorporated into the transaction. In the Property Costs section, Escrow Account Type will be limited to Escrow account established and required, and an escrowed property cost of Mortgage Insurance will be included in the table.

When the timing of the disbursement requires that reserves be deposited with lender at closing to cover the upcoming item, the number of payments, payment and total amount will automatically be calculated within the Reserves Deposited with Lender table. In addition, an individual fee will be created for that Mortgage Insurance escrow item in the Fees section which will reflect the total of that fee and other applicable information. As with the UFMIP fee noted above, if a change to the Mortgage Insurance escrow amount is required, you must update the information in the Mortgage Insurance or Escrow section as the details of the fee will be read-only.

You must indicate whether you prefer the mortgage insurance payments that are held in escrow to be applied to the payment stream through the final termination point or will be refunded separately to the borrower. If the escrowed mortgage insurance is refunded separately, the term of the cutoff will not be credited by the number of months escrowed.

The Cushion in the escrow section allows you to collect a cushion for mortgage insurance that is different from the cushion collected for other escrow items such as property taxes or homeowner’s insurance.

Click Calculate to see updated values based on changes made in the Mortgage Insurance section.