Up-Front Mortgage Insurance - UFMI
What is 'Up-Front Mortgage Insurance - UFMI'
An insurance premium that is collected, typically on Federal Housing Administration (FHA) loans, at the time the loan is initially made. It is in contrast to private mortgage insurance (PMI), which is collected by the lender each month when a buyer's down payment is less than 20% of the purchase price. Up-front mortgage premiums are added to a pool of money that is used to help entities, such as the FHA, insure loans for certain borrowers.
BREAKING DOWN 'Up-Front Mortgage Insurance - UFMI'
Many people do not realize that up-front mortgage premiums are typically refundable, on a pro-rated basis, if a home is sold within the first five to seven years of ownership. In other words, if someone has paid this premium up front and then sold their home within a few years of their original purchase, they may be entitled to a substantial refund even years after the fact. To find out if you might be eligible, call the FHA at 1-800-697-6967.