USER QUESTION: What is the difference between PMI and MIP?
Here is a clear understanding of the difference between PMI and MIP on FHA loans! Here's a breakdown of the key points you mentioned:

PMI vs. MIP:

Loan Type: PMI applies to conventional loans, while MIP is for FHA loans.
Down Payment Threshold: PMI is typically required when the down payment is less than 20% of the loan amount. FHA loans require MIP regardless of the down payment (usually at least 3.5%).
Administration: PMI is handled by private mortgage insurers. MIP is managed by the Federal Housing Administration (FHA).
Costs and Premiums:
PMI: Varies depending on loan terms, creditworthiness, and loan-to-value (LTV) ratio. Generally falls between 0.1% and 2% annually. No upfront fee.
MIP: Has two parts - an upfront mortgage insurance premium (UFMIP) of 1.75% of the loan amount (can be financed) and an annual MIP (0.5% to 1.75% based on LTV and loan term).
In essence, PMI offers lenders more flexibility based on borrower's creditworthiness, while MIP has a set structure for FHA loans.
REERENCE:Roberto Pineyro

Comments

Post a Comment

Your comments are always welcomed and appreciated. Thank you.

Popular posts from this blog

Know your rights under mortgage payment forberance

Image
Photo by  Andrea Piacquadio  from  Pexels To combat ongoing misinformation, the Federal Housing Finance Agency (FHFA) reiterated that borrowers in forbearance with a  Fannie Mae or Freddie  Mac-backed mortgage are not required to repay the missed payments in one lump sum. According to the McDash Flash Forbearance Tracker from  Black Knight , as of April 23, 2020, more than 3.4 million homeowners, or 6.4% of all mortgages, have entered into COVID-19 mortgage forbearance plans. “During this national health emergency, no one should be worried about losing their home," said Director Mark Calabria. “No lump sum is required at the end of a borrower's forbearance plan for Enterprise-backed mortgages. To help homeowners navigate the forbearance process, FHFA partnered with CFPB on the Borrower Protection Program to provide homeowners accurate information about forbearance and address concerns noted in some consumer complaints. While today's statement only covers Fannie Ma
Read more

Challenges for Miami Homebuyers

Image
Navigating the New Real Estate Landscape:  Challenges for Miami Homebuyers Miami Homebuyers Facing Obstacles The real estate market in Miami has become increasingly challenging for homebuyers. Over the past few years, housing prices have skyrocketed, while mortgage interest rates have risen to unexpected levels. Unfortunately, wages haven’t kept pace with inflation, making it more difficult for many to afford their dream home. As if these challenges weren’t enough, new rules from the National Association of Realtors (NAR) are set to change how commissions are handled in real estate transactions, adding another layer of complexity for buyers. The Impact of the NAR Settlement Rules Beginning this Saturday, real estate agents listing homes on the Multiple Listing Service (MLS), a widely used database for agents, will no longer be allowed to advertise any compensation to buyer's agents. Previously, it was common for sellers to pay commissions to real estate agents on both sides of the
Read more