Articles in Category: Mortgage Insurance

March 13, 2024

Home Loan Mortgage Insurance Requirements

When it is time to buy a new home, borrowers have important decisions to make about mortgage insurance. Do you know who is required to pay for mortgage insurance and why? There are home loan programs that offer the option of paying 20% down and sidestepping the lender’s mortgage insurance requirements. Other mortgage loans may require borrowers to come up with a larger down payment to take advantage of the option to stop paying mortgage insurance after 11 years. Some mortgages have no insurance guidelines in this area at all. We examine these programs below. What To Know About Conventional Loan Mortgage Insurance There is no national standard for conventional loan mortgage insurance in terms of lender requirements. Borrowers can expect to pay 20% down on a conventional loan to avoid | more...

November 2, 2023

Do You Need Down Payment Help?

By Joe Wallace

Saving for your down payment early is a great idea, and doing so can be easier when you have a clear goal in mind. But how much IS that down payment, and when should I start doing the math? Some people are intimidated by saving up for and making the down payment. Even the most disciplined house hunter used to cutting corners for a bigger goal might need some outside help regarding the down payment needed to buy a home. FHA Loans Require Less Money Down FHA mortgages have lower down payment requirements than conventional loans, especially if you want to avoid Private Mortgage Insurance on a conventional mortgage (20% is usually required in such cases). State agencies and other entities operating at the local level often offer down payment | more...

How much can I borrow with an FHA refinance loan?

April 27, 2023

UFMIP: FHA Loan Rules

By Joe Wallace

If you are a first-time borrower with questions regarding funding fees like the FHA Mortgage Insurance Premiums (MIP) and Up Front Mortgage Insurance Premiums (UFMIP), you are not alone. Many newcomers to the home loan process are confused by these fees (at first) but there are simple answers for most of these borrower questions. For FHA Single-Family mortgages, the rules for the Up Front Mortgage Insurance Premium are found in HUD 4000.1, starting with the explanation of both UFMIP and MIP: “FHA collects a one-time Upfront Mortgage Insurance Premium (UFMIP) and an annual insurance premium, also referred to as the periodic or monthly MIP, which is collected in monthly installments.” Some borrowers wonder if you can finance the UFMIP and how doing so might affect the amount of the mortgage | more...

February 15, 2022

FHA Mortgage Insurance: What You Need To Know

By Joe Wallace

When you apply for an FHA mortgage, you are required to have mortgage insurance. This comes in the form of an FHA Up-Front Mortgage Insurance Premium which is paid at closing time in cash or financed into the FHA loan amount. You can do one or the other, but you can’t partially finance this premium. That’s the “up front” part. FHA loans require an annual premium paid in monthly installments. This is called a Mortgage Insurance Premium and is not the same as conventional Private Mortgage Insurance. That is required by conventional lenders for certain mortgages without a 20% down payment or better. Private mortgage insurance is known by the acronym PMI, and some borrowers (even some lenders) use MIP and PMI interchangeably even though they aren’t the same thing. | more...

July 19, 2021

FHA Mortgage Insurance Options

By Joe Wallace

There are plenty of things you might need to know about the FHA mortgage insurance premium, but if you are a first-time home buyer there are some aspects about this you should know about as early as possible so you can make the most informed choices possible about your home loan, what to finance, and how much to save. Learn Your Options Getting ready for a home loan means learning which items you have the option of including in the loan amount and how much you will pay over the lifetime of the loan on interest rates on the amount of your loan AND the add-ons you choose to include. And that’s where understanding FHA mortgage insurance becomes very important. One thing some people initially get confused over? Mistaking PMI | more...

May 20, 2021

Mortgage Insurance And Homeowner’s Insurance

By Joe Wallace

No matter what kind of home loan you apply for, you will have issues related to mortgage insurance to brush up on. Are you a first-time homebuyer? Do you have experience buying a home? In either case, there are things to remember. Some new to buying a home assume (mistakenly) that some kinds of insurance are universal. Then there are those who confuse mortgage insurance with homeowner’s insurance. This is not an unusual mistake to make, but it can cost you. What do you need to know about insurance issues? The first thing involves who is protected under the insurance plan. Mortgage Insurance Premiums (MIP) If you want to avoid paying for mortgage insurance on a conventional loan, you are generally required to put a whopping 20% down. When it | more...

July 12, 2019

The Difference Between Homeowner’s Insurance And Mortgage Insurance

By Bruce Reichstein

The journey toward home ownership costs money; you need to save for your down payment, closing costs, inspection fees, and mortgage insurance. But there is an expense you should also know about that protects you from fires, theft, and other property damage-the homeowner’s insurance policy. What is the difference between mortgage insurance and homeowner’s insurance? Borrowers need to know the nuances and be fully prepared to become a homeowner by understanding what protects YOU and what protects the LENDER. FHA Mortgage Insurance Protects The Lender FHA mortgage insurance premiums are paid as part of your monthly mortgage payment. You are required to pay an Up-Front Mortgage Insurance Premium (UFMIP) and a monthly mortgage insurance premium. These payments are designed to protect the lender in case the borrower defaults on the | more...

June 13, 2018

Is There Such A Thing As A Refund For FHA UFMIP Mortgage Insurance?

By Joe Wallace

Is there such a thing as a refund for FHA Up-Front Mortgage Insurance or FHA UFMIP? This mortgage insurance premium is required on FHA loan transactions and must be paid either in cash at closing time or must be financed into the loan amount. FHA loan rules do not allow a borrower to pay a portion and finance a portion of the FHA UFMIP, it must be paid in full using financing or cash. Borrowers have many questions about this FHA mortgage insurance requirement, including whether or not a refund is possible under the right circumstances. FHA forward mortgages require UFMIP as a condition of the loan no matter if the transaction is an FHA One-Time Close construction loan, existing construction purchase, or whether the borrower is buying a manufactured | more...

November 7, 2017

Why Do I Have To Pay For Mortgage Insurance On An FHA Loan?

By Bruce Reichstein

Why do I have to pay for mortgage insurance on an FHA loan? Borrowers who are used to the terms and conditions of conventional mortgages will know that (depending on the lender) without a substantial down payment, conventional loans require private mortgage insurance (PMI) to protect the lender in case of loan default. FHA mortgages also require loan insurance, but not through a private company. Instead, the FHA requires the borrower to pay a mortgage insurance premium as part of their monthly mortgage payment, and also an Up Front Mortgage Insurance Premium (UFMIP) at loan closing time. It’s easy to get Private Mortgage Insurance (PMI) confused with the FHA’s Mortgage Insurance Premiums (MIP) but they are not the same and FHA mortgage insurance is handled differently and has different requirements | more...

September 26, 2017

Can I Finance My FHA Loan Up Front Mortgage Insurance Premium?

By Bruce Reichstein

Can I finance my FHA loan Up Front Mortgage Insurance Premium (UFMIP)? And how does it affect my mortgage loan? These are questions many ask, unsure of whether FHA mortgage loan limits include the UFMIP and how they are allowed to pay. FHA Up Front Mortgage Insurance Premiums May Be Financed FHA loan rules in HUD 4000.1, the FHA loan handbook, state clearly that FHA UFMIP may be financed. It will be included in the final loan amount at closing time. UFMIP Must Be Financed Or Paid In Cash HUD 4000.1 instructs the lender to either collect the Up Front Mortgage Insurance Premium in cash at closing time, or have it included into the loan amount. However, the borrower must pay 100% either way-you cannot finance half the amount and | more...