Different Types of Mortgage Insurance
Are shopping for a home loan? Understanding mortgage insurance will help you make an informed decision. There are two types of mortgage insurance – private mortgage insurance (PMI) and mortgage insurance premiums (MIP). There are distinct differences between PMI and MIP that should be considered when deciding which loan program suits your financial needs.
What is PMI?
PMI is private mortgage insurance available in a variety of premium plan structures and 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. A licensed loan officer can explain your private mortgage insurance options in great detail.
What is MIP?
MIP is the government-administered mortgage insurance program for the FHA that has certain restrictions and has undergone a number of changes over the last few years. This type of insurance is used to offset the risk of lending to borrowers with a smaller down payment – which FHA loans offer. It is important to note that MIP is a permanent part of a FHA loan and cannot be removed without refinancing.
Differences Between PMI & MIP
Major differences between these insurance programs include:
- PMI is required for conventional loans with less than a 20% down payment, while MIP is required with FHA loans
- No upfront mortgage premium is required with PMI while an upfront MIP is required with FHA loans (upfront MIP with FHA can be financed into loan)
- Monthly PMI can be canceled after a stated LTV is achieved and favorable payment history has been established, while monthly MIP is paid for the life of the loan (until loan is refinanced)
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.
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About Inlanta Mortgage
Last year, Inlanta Mortgage celebrated its 20th Anniversary. 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 here.
Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin NMLS #1016. 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.