Today I am going to discuss How to beat the bank on an FHA loan by avoiding the upfront mortgage insurance.
FHA charges 1.75% of the loan amount – which is typically added to your base loan amount. On a 100,000 loan, the amount – $1,750 – will be added for a total loan amount of $101,750.
The way you take advantage of the bank is to buy out of the upfront mortgage insurance by taking a slightly higher interest rate. You need to ask your loan officer, because it is seldomly mentioned as an option.
The typical cost to buy out will be between .25 and .50 in rate depending on credit score. The break even point is 5 to 11 years, so time is on your side to refinance out of the FHA mortgage.
If you have any questions please call me at 617-529-9317.