Are there any mortgage or loan professionals on here? I need some help.. (Nassau: insurance, condo)

[trinisweetness]

We are in the process of trying to get a mortgage for a home and I am a little confused. We spoke with one person and they advised that you only have to pay PMI. Another person said " MIP is a one time upfront charge that Everyone pays and PMI everyone pays on a monthly basis for 5 years". Is this true? Has this been anyones experience? We are going for a FHA loan with 3.5 percent down.
Any help would be appreciated. thanks.

[Interlude]

You pay PMI if you have < 20% equity and will continue to pay it until you have >= 20% equity.

[thebobs]

From what I understand if you put less than 20% down, you have to pay PMI and you have to stay in the home for 5 years (I think, though please correct me if i'm wrong) or else you have to pay a penalty!?!?

I'm sure about the percentage and the staying in the home for a certain period of time but I don't know the specific numbers.

[trinisweetness]

Originally Posted by Interlude

You pay PMI if you have < 20% equity and will continue to pay it until you have >= 20% equity.

I understand that you have to pay PMI if you are putting less than 20% down but im confused about the MIP. YOu have to pay both? Or one or the other?

[jpg71]

Perhaps they were referring to the upfront insurance premium paid on FHA loans?

[nycbrooklyn]

Originally Posted by jpg71

Perhaps they were referring to the upfront insurance premium paid on FHA loans?

That is correct jpg71: With FHA Loans you pay pmi for 5 years even if the LTV reaches 20%. What that person is talking about is the upfront insurance you pay with an FHA Loan. I don't remember the perentage of the loan but that would be where the confusion is coming from.

[propain]

Originally Posted by Interlude

You pay PMI if you have < 20% equity and will continue to pay it until you have >= 20% equity.

This is correct based on the LTV of the home. Loan To Value. How much you are borrowing vs how much the house is worth.

If you are in an area that is in "Severe Decline" meaning the values are dropping that LTV limits are lowered by 15% in most cases. So a normal loan would be 75% LTV without paying PMI would now be 60% LTV. Much of Nassau is considered in "Severe Decline" according to the banks.

FHA however you automatically pay PMI for the first 5 years. You also pay some very steep closing costs. On a loan of 500K with 10K in taxes you can expect to pay almost 25K in closing costs doing an FHA.

Conventional limits have also been raised in most areas. A conventional rate WAS 417K and below. Now in some areas in Nassau its 725K and below. What that means is you qualify for the conventional limit interest rate unless you are above 725K. This is referred to as a Jumbo loan or Super Jumbo.

I am not an expert in the field by no means. I work more with Corporate Loans. But the above is my understanding.

[MDtech123]

Not sure if anyone cleared this up yet but with an FHA you will pay PMI (about $160/month depending on home price). You will also pay a 1 time MIP fee that actually gets financed into your loan (about $6,500 for me) and it actuall comes out of ur downpayment somewhat. If you bought a house for 300,000 and put down 3.5% ($10,500) your loan amount will actually be 300,000 - 10,500 = 289,500 + 6,500(MIP) = 296,000.

[Jackie78]

We didn't have to pay an PMI's on our mortgage and we didn't put any money down.

Never heard of MIP

[LIgirl74]

Originally Posted by Jackie78

We didn't have to pay an PMI's on our mortgage and we didn't put any money down.

Never heard of MIP

hey Jackie! Maybe you did what my husband and I did when we purchased our condo...we did a piggyback loan. In other words, we did a 1st mortgage of 80% and then a HELOC loan for the rest. In today's market, they do not do these loans anymore. The piggyback loans did not require PMI b/c you were taking only 80% out for your 1st mortgage. Anything over 80%, requires PMI.