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Are there points charged on all FHA loans?

  • March 25 2011 - Auburn
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Answers (10)

I did a quick comparison between Fannie Mae's Renovation loan and a 203K loan.

I assumed a credit score between 660-679 and max financing.  With today's rate sheet using the highest avalable rate, I would only be able to absord 3% of the 5.875% of loan level price adjustments that apply to the Homepath program.  So I would be charging 5.5% with 2.875% points fo a  Homepath or Homepath Renovation vs 5% with 0 points for an FHA 203K.

Comparison.
  • March 25 2011
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Max-Are you confusing a 203K loan with a Fannie Mae Homepath Renovation loan.  The homepath program has some substantial price add-ons that make it impossible to build all the points into the price, so in may cases the lender would have to charge points to cover the loan level price adjusters on a homepath or homepath Renovation loan.
  • March 25 2011
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Up to the lender.  Depending on credit you should be getting quouted between 4.5-4.75% with 0 points, unless it is a 203K loan and then you should be looking at 4.75% -5%.

  • March 25 2011
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no
  • March 25 2011
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The loan terms are dictated by your lender/broker.  
  • March 25 2011
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The FHA 203K loan size is $164,000 for the purchase of a FNMA REO home in MA.    Is it FHA that stipulates the points (and yes, I mean points, not PMI) or is it at the discretion of the lender?
  • March 25 2011
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It depends.  This is something you need to discuss with your loan officer.  Every Market is different upon the pricing.  Basically, this is how the loan officer is paid.  They're paid strictly on commission (No salary, no wages).  Typically, they will charge a Point (1% of the loan amount) as Loan Origination Fee.  They either can get paid up front (via Points) or on the backend (via Yield Spread Premiums, or YSPs).  The YSPs are paid to the loan officer when they raise the interest rate, so they receive about 1 Point back to them (no, they don't keep the entire point, as it's split between their agreement with the lender).  This is helpful because it allows the borrower to come in with less money to close.  As of April 1st, this will be changing, as the Fed and part of the stipulation in the Frank-Dodd Bill will abolish the YSP.  We're not exactly sure how this will play out, but most likely, there will be more costs passed on the consumer.  Believe me, the Loan Officers weren't in favor of this passage, as there are litigations being filed to fight this passage.  Don't want to rant, but hopefully, this will shed some light on Points for you.
  • March 25 2011
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You may be referring to mortgage insurance rather than points and yes there is MI on all FHA loans regardless on LTV. Points are only paid to get a lower rate and are only usually paid when there is a hefty seller concession.
  • March 25 2011
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  • March 25 2011
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That depends on how you structure the loan. What is the loan size and rate?
  • March 25 2011
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