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.

FHA Mortgages & FHA Streamline Refinance

FHA Mortgage Information and Frequently Asked Questions

What should you know about FHA mortgages?

FHA Mortgage Loans

FHA mortgage loans are very competitive loan programs. FHA mortgages allow the homebuyer to put down a low down payment and have less than perfect credit. Other benefits of the FHA mortgage loan program include:

  • lower closing costs
  • down payment can be gifted to the homebuyer
  • available on 1-4 unit properties
  • cash reserves not required
  • closing costs can be paid by seller
  • flexible qualifying debt to income ratios
  • streamline refinance available

FHA Mortgage Loan FAQs

Q. How can the FHA help me buy a home?
A.
Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify

Q. What are basic eligibility requirements for FHA financing?
A.
Generally, to be eligible for an FHA loan, you must have a valid social security number and have lawful residency in the United States and be of a legal age to sign on a mortgage in your state. Your lender will verify income, assets, liabilities, and credit history for all parties on the loan.

Q. How do I find a FHA approved lender?
A.
Inlanta Mortgage is an FHA approved lender. Find a licensed mortgage loan professional near you here.

Q. Does bankruptcy disqualify a borrower from being eligible for a FHA mortgage?
A.
No, you may be eligible if more than two years has elapsed since the date of the discharge of the bankruptcy.

Q. How is an FHA Mortgage Loan structured?
A.
FHA Mortgage loans require a mortgage insurance premium to be collected at closing (upfront MI) and an annual premium is collected in monthly installments. The FHA mortgage insurance premium is not the same as your homeowner’s insurance and is required of all borrowers with less than 20% down payment. A typical monthly mortgage payment on a FHA mortgage loan includes principal and interest, taxes, mortgage insurance premium (MIP), homeowner’s insurance (assuming you have elected to make monthly payments on taxes and homeowner’s insurance).

~New developments regarding MIP~
HUD announced that upfront mortgage insurance premiums for FHA loans will increase April 1, 2012 and again on June 1, 2012 for high cost areas only. IF you think you’ll want an FHA loan for your next mortgage, the best way to avoid the new FHA fees is to apply for an FHA loan before the new FHA MI premiums go into effect April 1, 2012. Contact a licensed mortgage loan professional for more information on increasing upfront mortgage insurance premiums for FHA mortgage loans.

Q. Am I eligible for a FHA Streamline Refinance?
A.
The mortgage to be refinanced must already be FHA insured. The mortgage to be refinanced should be current (not delinquent). The refinance is to result in a lowering of the borrower’s monthly principal and interest payments. No cash may be taken out on mortgages refinanced using the streamline refinance process. Contact a mortgage loan professional near you to discuss FHA Streamline Refinance opportunities.

~BREAKING NEWS REGARDING FHA STREAMLINE REFINANCE~
Recently announced changes from the White House affects loans the Federal Housing Administration insures and would reduce fees on those mortgages for borrowers previously unable to borrow at lower rates.
The Obama administration said it will lower the costs on up-front mortgage insurance premiums to 0.01 percent for streamlined refinancing of FHA loans. The White House said it will cut the annual fee for these refinancings in half to 0.55 percent.
The eligible borrowers for the streamline refinance program must have taken out those FHA loans on or before May 31, 2009.
Contact your licensed mortgage loan professional for more information!

Inlanta Mortgage is proud to be a direct endorsed lender of the Federal Housing Authority (FHA) mortgage loans. Apply now for a loan or find a licensed mortgage loan professional near you.

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.

FHA 203K Streamline Mortgages – Give a Home Some TLC

FHA 203K Streamline Mortgage Loans

We’ve been bombarded with news about the number of vacant and foreclosed homes on the market. Many of these homes are the in the perfect location and are in the right price range ….but need a little tender loving care.  There is a mortgage loan program that addresses this issue – the FHA 203k Streamline Mortgage Loan.

FHA 203K Streamline Mortgage Loans

The FHA 203K Streamline Mortgage program gives you the ability to refinance or purchase a home in need of repairs by allowing you to include the cost of repairs in the loan. This program is guaranteed by the U.S Department of Housing and Urban Development and permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in.

The FHA 203K Streamline mortgage loan program has been instrumental to neighborhood revitalization efforts.

The following repairs are eligible under the FHA 203K Streamline Mortgage loan program:

  • Repair/Replacement of roofs, gutters and downspouts
  • Repair/Replace/Upgrade of existing HVAC systems
  • Repair/Replace/Upgrade of plumbing and electrical systems
  • Repair/Replacement of existing flooring
  • Minor remodeling, such as kitchens and baths
  • Exterior and interior painting
  • Weatherization that includes storm windows and doors, insulation, weather stripping, etc.
  • Non-structural improvements for accessibility for persons with disabilities
  • Discretionary repair items that may not have been included in the appraisal, such as, repair of exterior decks, basement waterproofing, etc.

FHA 203K Frequently Asked Questions

Q: Is the 203k Streamline for purchases only?
A: No, the Streamline 203k may be used for a purchase or a refinance. It may also be used to purchase a REO (Real Estate Owned) property.

Q: Who is responsible for repairs?
A: The homebuyer/owner pays for the repairs from the loan proceeds.

Q: Do repairs have to be completed before the loan closing?
A: No, the repairs may begin after the loan is closed.

Q: Do I have to hire a general contractor?
A: If the repairs require more than one contractor, the mortgagor must utilize the services of a licensed general contractor.

Q: Do I have to hire an FHA Consultant?
A: No, to eliminate the need and cost for an inspection of the completed repairs, the lender may accept receipts from the contractor or proof of completion of the work to the homeowner’s satisfaction.

Q: What repairs are not allowable?
A: Repairs that are considered major rehabilitation or requiring structural modification. For more information on purchasing a home requiring major rehabiliation or structural modification contact a licensed mortgage loan officer near you.

Q: What is the maximum that can be spent on repairs?
A: Rehab costs, plus applicable contingency reserves and fees cannot exceed $35,000.

Q: Who receives payment for the repairs?
A: Up to two payments may be made to the contractor or the homeowner.

Q: How much down payment do I need?
A: As with most FHA mortgage loan programs, the minimum investment is 3.5%.

Q: What about construction fees?
A: Most construction fees (i.e.: loan discount points, title update costs, permit costs) may be financed in the loan.

The FHA 203K Streamline Mortgage Loan program can help you give a fixer upper a little tender loving care. The FHA 203K Streamline Mortgage loan process can be explained in more detail by a licensed mortgage loan officer. Click here to find a mortgage loan officer near you. If you would like to jump right into the application process, click here to begin your Inlanta Mortgage loan application.

Need a little refresher on mortgage loans in general? Check out our blog post Mortgage Loan Basics.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS# 1016.

Inlanta Mortgage is not acting on behalf of or at the direction of HUD/FHA or the Federal government.