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PMI vs. MIP – What’s the Difference?

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PMI vs. MIP – what’s the difference?

Purchasing a home, especially for the first time, can feel overwhelming and intimidating. With all of the mortgage and real estate lingo, it’s no wonder buyers often find themselves confused. One of the most common questions home buyers have during the purchasing process is, “What is PMI (mortgage insurance), and why do I need it?”

What is Mortgage Insurance

Mortgage insurance is typically required of home buyers when their down payments are less than 20 percent for their home loans. Note that mortgage insurance is designed to help protect lenders and guarantee agencies when borrowers don’t have enough equity in their homes. It is not intended to protect the borrowers. There are two types of mortgage insurance – PMI & MIP.

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 best suits your financial needs.

PMI, provided by private companies, is typically available in a variety of premium plans 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.

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 borrowers defaulting on their loans.

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
  • Cancellation
    • PMI can be canceled after a stated LTV (loan-to-value) is achieved and favorable payment history has been established
    • MIP is paid for the life of the loan regardless of LTV. In order to remove MIP, borrowers must refinance their FHA mortgage loans, 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.

FHA Mortgage Loan Guidelines

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FHA Mortgage Loans

What is an FHA Mortgage Loan?

An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). An FHA loan is typically one of the easiest types of mortgage loans to qualify for because you can have less-than-perfect credit and the required down payment (3.5 percent) is lower than conventional loans.

FHA Mortgage Loan Qualifications

The FHA imposes certain loan guidelines that FHA-approved lenders and potential borrowers must abide by. In order for an FHA-approved lender, such as Inlanta Mortgage, to approve a borrower for an FHA mortgage loan the borrower must meet the following criteria:

  • Must have steady employment history or a minimum of two years working for the same employer
  • Must have valid social security number
  • Must be using purchased property as primary residence
  • The property mush be appraised by an FHA-approved appraiser

Other qualifying criteria will apply. For more information, find a licensed Inlanta Mortgage loan officer near you using our branch locator. Inlanta Mortgage loan officers can securely accept mortgage applications online. If aren’t sure who to apply with, feel free to apply here and we will redirect your application to a loan officer licensed to originate in your area.

FHA Mortgage Insurance – MIP & UFMIP

Since the guidelines for FHA mortgage loans are less strict than conventional mortgage loans and the loan offers a lower down payment option, there is a higher risk of associated with FHA loans. As a result of this increased risk, the FHA requires borrowers to pay mortgage insurance premiums. There are two kinds of mortgage insurance premiums associated with FHA mortgage loans. The first premium, upfront mortgage insurance premium (UFMIP) is one that is paid upfront. In actuality, the UFMIP can be paid in full upfront or financed into the mortgage. The second is an annual insurance premium that is billed monthly. The monthly mortgage insurance premium that will be due each month through the life of the loan. For more information on the FHA mortgage insurance premium collection process, visit Hud.gov.

The expense of FHA mortgage insurance premiums is something you should consider when evaluating various loan programs. Discuss all available Inlanta Mortgage loan program options licensed mortgage loan officer. Your loan officer will be able to help you determine which loan program is best for your unique financial situation.

About Inlanta Mortgage

Inlanta Mortgage is proudly celebrating twenty years in business. Check out our 20th Anniversary Video.

Inlanta Mortgage provides its branches with 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. Review Inlanta’s mortgage loan programs.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS #1016. Inlanta Mortgage was recently recognized as one of the Fastest Growing Firms in the Milwaukee-Area, is proud to be named to the Scotsman Guide Top Mortgage Lenders 2012 list and to be among the Top 100 Mortgage Banking Companies in America in 2012.

 

What is Private Mortgage Insurance or PMI?

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Mortgage-Insurance

What is Private Mortgage Insurance or PMI?

Private Mortgage Insurance (PMI) is a policy provided by private mortgage insurers to protect lenders against loss if a borrower defaults. The benefit of private mortgage insurance to the borrower is that it allows a borrower to purchase a home without putting down a 20% down payment.

PMI should not be mistaken for MIP, or Mortgage Insurance Premiums, purchased from the government for FHA mortgage loans.

What’s the Difference Between MIP & PMI?

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 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.

MIP is the government-administered mortgage insurance program that has certain restrictions and has undergone a number of changes recently.

Major Differences Between PMI & MIP

Major differences between these insurance programs include:

  • Only a monthly premium is required with PMI while MIP requires both an upfront MIP (UFMIP) and a monthly premium.
  • 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.

For More Information

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.

About Inlanta Mortgage

Inlanta Mortgage is proudly celebrating twenty years in business. Check out our 20th Anniversary Video.

Inlanta Mortgage provides its branches with 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 approved. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS #1016. Inlanta Mortgage was recently recognized as one of the Fastest Growing Firms in the Milwaukee-Area, is proud to be named to the Scotsman Guide Top Mortgage Lenders 2012 list and to be among the Top 100 Mortgage Banking Companies in America in 2012.

Deadline for FHA Borrowers

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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.

 

 

FHA Streamline Refinancing – Fee Reductions on Horizon

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FHA Streamline Refinance Mortgage Insurance Fees Going Down

On June 11, 2012, the Federal Housing Administration will provide relief to certain homeowners with existing FHA mortgages that want to refinance using the FHA’s Streamline Refinance program. This relief will come in the form of reduced upfront mortgage insurance payments and reduced monthly insurance premiums.

The new FHA Streamline Refinance annual premium, which is paid monthly by the borrower, will now be .55% on a streamline refinance of any loan endorsed on or before May 31, 2009. This is a much lower premium rate than the current FHA Streamline rate of 1.2% – 1.25%. The upfront mortgage insurance premium (UFMIP) is a one-time fee collected by FHA and added to the loan balance. FHA recently announced an increase of UFMIP to 1.75% starting April 1st, but as of June 11th this new FHA Streamline Refinance UFMIP rate is only .01% when the previous loan was endorsed on or before May 31, 2009.  All other streamline refinances will still be subject to the UFMIP rate of 1.75%.

FHA Streamline Refinances are the fastest, simplest way for homeowners with FHA mortgages to refinance. Another defining characteristic of the FHA Streamline Refinance program is that a home appraisal is optional. Instead of a new home appraisal, the FHA will allow you to use the original loan’s appraised value as your home’s current value, regardless of what your home is worth today. This may be quite helpful to homeowners who suffered reductions in home values since 2007.

A licensed mortgage loan officer can help you determine if you meet the requirements to be eligible for the reduced premiums available and if a FHA Streamline Refinance is right for you. Click here to find a 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.

 

PMI & MIP – What’s the Difference?

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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.