Question

All of the following statements about the FHA up-front mortgage insurance Premium are accurate, EXCEPT:

a. the UFMIP can be paid by the borrower, the seller or a third party
b. the UFPIM is paid at the time of closing although a portion of the premium may be financed
c. The UFMIP is paid annually for the life of the loan
d. in most cases, the UFPIM is 1.75% of the loan amount

Answer 1

The incorrect statement about FHA UFMIP is that it is paid annually for the life of the loan. It is actually paid upfront at closing and may be financed into the loan amount.

Step-by-step explanation:

The question relates to the FHA up-front mortgage insurance premium (UFMIP), which is a requirement for certain home loans insured by the Federal Housing Administration. One of the statements provided is not accurate. The incorrect statement is that the UFMIP is paid annually for the life of the loan.

The UFMIP can be paid by the borrower, the seller, or a third party. It's usually 1.75% of the loan amount and is paid at the time of closing, although a borrower can choose to finance a portion of the premium into their mortgage, increasing the overall loan amount.