Mortgage Insurance Makes a Difference

mortgage insurance

What is Mortgage Insurance?

Mortgage insurance is required when at least 20 percent of a home’s purchase price is not provided as a down payment. Basically, mortgage insurance protects lenders against homeowner defaults and encourages lenders and investors to make funds available for mortgage lending purposes. Without mortgage insurance, most home buyers would not have access to low down payment mortgage loan programs.

Types of Mortgage Insurances

Mortgage insurance differs by loan program. Conventional mortgages have private mortgage insurance (PMI) and FHA loans have mortgage insurance premiums (MIP).

PMI, or private mortgage insurance, is typically available in a variety of premium plan structures and offers payment options that can usually be tailored to the borrower’s needs. There are a number of private mortgage insurance providers and each structure their offerings a bit differently. Borrowers can typically cancel PMI after reaching 20 percent equity in your home.

FHA mortgage insurance premiums or MIP, are administered by the government. FHA insured loans require an up front mortgage insurance premium (UFMIP) as well as an annual premium (usually billed monthly).  Unlike PMI, FHA mortgage insurance premiums are required for the life of the loan.

FHA or Conventional Loans?

While putting down a larger down payment (20%) on your dream home can help you avoid the issue of mortgage insurance all together – many people are not in the position to do so. Since both FHA and conventional mortgage loans offer low down payment options, borrowers often make their decisions based on the mortgage insurance requirements. In fact, changes to FHA mortgage insurance requirements have made conventional loans increasingly attractive to home buyers.

Contact an Inlanta Mortgage loan professional to discuss your options and ensure that you select the program that is right for you! Click here to find a licensed mortgage loan professional near you.

Our Mission Statement

Our mission is to be the home financing partner that you trust to serve your family, friends and community. Through our family of dedicated mortgage professionals our commitment is to deliver an exceptional experience. Our unwavering dedication to integrity, honesty and ethics is the foundation of all of our relationships.

About Inlanta Mortgage

Headquartered in Brookfield, Wis., Inlanta Mortgage was established in 1993. We are currently celebrating our 20th Anniversary! Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is an agency approved lender for Fannie Mae, FHA/VA, FHA 203K and USDA. Inlanta Mortgage also offers numerous state bond agency programs.

Inlanta Mortgage is privileged to have received a number of awards both locally and nationally. Read more about Inlanta Mortgage’s awards.

 

Deadline for FHA Borrowers

FHA Deadlines

Borrowers should be aware of some important FHA deadlines.

Many of us rely on low down payment mortgage options when seeking to become a home owner. FHA mortgages, backed by the Federal Housing Administration, are one low down payment mortgage loan option.

Increasing Monthly Insurance Premiums

While the 3.5% minimum down payment option will continue, monthly payments for borrowers who opt for an FHA mortgage will soon be facing higher monthly payments. Why? The FHA is changing its policies and will increase the monthly insurance premium borrowers pay. To avoid this increase in monthly insurance premiums, borrowers must apply for an FHA mortgage loan no later than March 28th and the lender they apply with must obtain a valid case number by March 29th.

If you are considering a home purchase and think the 3.5% down payment option would be your best option – contact a licensed mortgage loan officer as soon as possible so you are not subject to the premium increase in effect beginning April 1st.

Another FHA Mortgage Insurance Premium Change

Another policy change that may encourage you to begin your loan application sooner (than later) is the FHA’s decision to make mortgage insurance mandatory for either a minimum of 11 years or the life of the mortgage loan based on the Loan-to-Value (LTV) at the time of the loan closing effective for all case numbers assigned on or after June 3rd. Currently, the insurance fee is dropped once the outstanding balance falls to 78 percent of the home’s value or 5 years from the date when the money was borrowed.

We don’t mean to pressure! We just want those in the market for a new home to realize the cost savings that can be realized by getting an application in before March 28th.

Inlanta Mortgage loan officers can answer your specific questions and help you determine if an FHA mortgage loan is right for you.

Inlanta Mortgage is proudly celebrating twenty years in business. Learn more about Inlanta’s twenty year history here.

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is fully delegated HUD-FHA including FHA 203K, VA, and USDA approved. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS# 1016. Inlanta Mortgage is proud to be a recent recipient of a 2012 Top Workplace Award.

 

 

PMI & MIP – What’s the Difference?

Make Informed Decisions - Know the Difference Between PMI & MIP

Revised April 24, 2015

What is Mortgage Insurance

Mortgage insurance is a payment required of home buyers who have limited down payments for home loans. Mortgage insurance is designed to offset the borrower default risk for lenders and guaranteeing agencies that loan large amounts of money to borrowers with very little “skin in the game”. There are two types of mortgage insurance – MIP & PMI.

PMI & MIP

Although the concept of insurance protection is similar, there are distinct differences between private mortgage insurance (PMI) and FHA mortgage insurance premiums (MIP) that should be considered when deciding which loan program suits your financial needs.

PMI is private mortgage insurance that typically is available in a variety of premium plan structures and offers payment options that can usually be tailored to the borrower’s needs. There are a number of private mortgage insurance providers and each structure their offerings a bit differently. Read more about PMI here.

MIP is the government-administered mortgage insurance program for the FHA. Since FHA loans offer reduced down payment options, MIP is required to offset the risk of a borrower defaulting.

Major Differences Between MIP & PMI

Major differences between these insurance programs include:

  • No upfront mortgage premium required with PMI while an upfront MIP is required.
  • PMI can be canceled after a stated LTV is achieved and favorable payment history has been established, while MIP is paid for the life of the loan regardless of LTV. In order to remove MIP, a borrower must refinance their FHA mortgage loan and meet minimum down payment and credit requirements.

Contact an Inlanta Mortgage loan professional to discuss your options and ensure that you select the program that is right for you! Click here to find a licensed mortgage loan professional near you  or apply online today.

Our Mission Statement

Our mission is to be the home financing partner that you trust to serve your family, friends and community. Through our family of dedicated mortgage professionals, our commitment is to deliver an exceptional experience. Our unwavering dedication to integrity, honesty and ethics is the foundation of all of our relationships.

About Inlanta Mortgage

Headquartered in Brookfield, Wisconsin, Inlanta Mortgage is a growing mortgage banking firm committed to quality mortgage lending, ethical operations and strong customer service.

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is an agency approved lender for Freddie Mac and Fannie Mae, FHA/VA, FHA 203K and USDA. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs.

Inlanta Mortgage was recently named a Top Mortgage Lender in 2013 as well as 2012 by Scotsman Guide. Inlanta was also recently named a Top Workplace in 2014 as well as in 2012. Inlanta has also been named one of the “Top 100 Mortgage Companies in America” in 2011, 2012 and 2013 and one of the 50 Best Companies to Work For by Mortgage Executive Magazine.

Inlanta Mortgage, Inc. NMLS #1016.