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are FHA MIP and PMI the same thing?

i'd have to pay one up front and the other would be monthly is that correct? is there a way to waive the up front mortgage insurance fee or roll it into the monthly payments? by nlyonne86423555 from Framingham, Massachusetts. May 28th 2014 Reply


Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

The simple answer to your question is yes, they are effectively the same. However, it seems you are confused about the upfront MIP (Mortgage Insuracne Premium). FHA loans have TWO MIP's. One is paid monthly in addition to you PITI (Principal, interest, taxes and insurance) and the other is a one time, upfront charge. This Up Front MIP is equal to 1.75% of the base loan amount and automatically rolled into the loan amount, without being included in your LTV (Loan to value) calculation. For example, if your LTV is 96.5% with a $100k base loan amount, the up front MIP would be $1750 and would make your actual loan amount $101,750. However, your LTV for underwrtiting purposes would remain at 96.5%. Please feel free to contact me with any additional questions.

May 28th 2014
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Edward Fallon (edfallon)
#90 ranked lender in Pennsylvania - 143 contributions

They are both mortgage insurance, protecting the lender in the event of a default on the loan. PMI is Private Mortgage Insurance, and is required on a conventional loan with less than 20% down.FHA charges an upfront fee of 1.75% of the loan amount that can be financed or paid in cash. FHA also charges a fee monthly, that can range from .45% per year to 1.35% per year, depending on the term of the loan and the amount of the down payment. If you are concerned about the amount of mortgage insurance charged by the FHA, you should look at putting 5% down and taking a conventional loan. The mortgage insurance is less, and the guidelines are more strict, but if you qualify you will probably save money.

May 28th 2014
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Scott Murphy (scottmmurphy)
#22 ranked lender in Massachusetts - 15 contributions

Dear nlyonne, FHA insures mortgages with both the Up Front Mortgage Insurance Premium and a monthly insurance premium. The UFMIP is rolled into the mortgage so you don't have to come up with it out of pocket. And the monthly MI is paid each month as part of your mortgage payment. Be advised that in most cases FHA's monthly MI will be permanent, so even when you reach that 20% equity position it will not go away. It will be there right up until your last payment. If you're looking for a low down payment alternative to FHA, MassHousing offers as little as 3% down with no UFMIP and the monthly PMI which will go away when you achieve the magic equity position. MassHousing also offers a no-PMI program where the PMI is effectively built into the interest rate. And if you're interested in somewhat rural areas USDA does offer a zero down program with no PMI and a small monthly maintenance fee. If you have questions I'm local and am happy to help. I live in Tewksbury and keep an office in Waltham and can meet you in person at either location or another of your choice if you'd like. Give me a shout. 781-258-1293. THANKS! Scott

May 29th 2014
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