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.

 

What is PMI?

 

What is PMI?

What is PMI?

If you are embarking on a new home buying adventure – you will soon encounter the term “PMI.” So, what is PMI?

PMI stands for private mortgage insurance. PMI is required of buyers who put down less than 20 percent on their home loan – which is usually the case for most home buyers.

What is the point of PMI? While home owners’ insurance protects your investment, private mortgage insurance protects lenders’ investments and encourages and enables lenders to help more first time home buyers. Essentially, if PMI didn’t exist, lenders would require a higher down payment to mitigate the inherent risk in lending to first time home buyers. Many of us, especially first time home buyers, are not in a position to put down a 20% down payment.

PMI 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. PMI can be canceled after a stated LTV achieved and favorable payment history has been established.

As a quick note, don’t confuse monthly insurance premiums (MIP) for PMI. MIP is the government-administered mortgage insurance program for the FHA that has certain restrictions and has undergone a number of changes recently. Read more about MIP, FHA Mortgages & FHA Streamline Refinancing.

Are you a first time home buyer with more questions about the home buying process and what loan programs are available to meet your home financing needs? Contact a licensed mortgage loan professional near for more information.

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.

Mortgage Loans – The Basics

Basic Mortgage Loan Questions Answered

If you rent your home and always have… a mortgage may seem a bit scary.  Let’s try and clarify some of the basic terms and concepts related to mortgages, and give you something to think about as we approach 2012. With mortgage rates at record lows and home prices still down – this might just be the year some of you leap from renting to bona fide homeowner status.

How does a mortgage work?

A mortgage loan is secured using your new home as collateral. Over a period of time, typically 15 to 30 years, you make regular mortgage payments to reduce your overall mortgage loan debt in a process call amortization. Payments are applied to:

Principal

  • the principal is the sum of money you borrow to purchase your home
  • home buyers are often required to give their mortgage lender a cash down payment to reduce the amount of the principal (not all loan programs require down payments)
  • Click here for more information on Inlanta Mortgage’s loan programs or check back next week for our blog post detailing the loan programs Inlanta Mortgage offers.

Interest

  • interest is the amount your mortgage lender charges to use their money
  • in the early years of your mortgage, payments are mostly interest

Taxes

  • property taxes are levied by your community and based upon the value of your home (which you will still have to pay once your mortgage is paid off)
  • part of your mortgage payment is usually deposited in escrow or a trust account to pay these taxes (not required in all cases, but FHA loan programs require escrow)

Homeowner’s Insurance

  • home owner’s insurance protects the property you are buying
  • part of your mortgage payment is usually deposited in escrow or a trust account to pay your home owner’s insurance premiums  (not required in all cases, but FHA loan programs require escrow)

Private Mortgage Insurance (PMI)

  • if you put less than 20% down on your home purchase, most lenders will charge you private mortgage insurance (PMI) – which is designed to protect the lender from you defaulting on your mortgage.
  • PMI is not in anyway connected to homeowner’s insurance (PMI protects the lender, homeowner’s insurance protects your property)

Mortgage Payment = Principal + Interest + Taxes + Insurance
Check out our mortgage loan calculators to estimate how much your payments would be based upon term of loan, interest rate, loan amount, tax, and insurance or contact a licensed mortgage loan professional to discuss your unique situation.

What types of mortgages are there?

Fixed Rate Mortgages

  • fixed rate loans have the same interest rate for the life of the mortgage loan.
  • fixed rate loans are typically 15 or 30 year mortgage loans (but not always)

Adjustable Rate Mortgages (ARMs)

What does a lender need to know to qualify you for a mortgage loan?

Are there different mortgage loan programs?

There are a variety of loan program available to suit your specific needs.  Our next few blog posts will detail some of loan programs that Inlanta Mortgage is proud to offer including:

Are you ready to begin a loan application today? Apply here or Click here to find a licensed Inlanta Mortgage loan professional near you.

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