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Hi everyone I’m a little confused about MIP. I am buying a house with an FHA loan. I am paying upfront MIP at closing. But also in my monthly mortgage payment I am paying a monthly mortgage insurance premium which is included in my payment. Why do I have to pay upfront AND monthly ? Am I missing something here? And I also have been told the upfront MIP is refundable ? Thanks for the help.
You pay 1.75% of the loan amount, rolled into the loan, as up-front Mortgage Insurance Premium (MIP), as well as a monthly factor that is usually .00085 of the loan amount, usually for the entire length of the loan, but refer to their chart here: https://www.hud.gov/sites/documents/15-01MLATCH.PDF
Refundable: Not really. If you do an FHA refinance within the first 36 months, a portion of the up-front premium will be credited to you, on a sliding scale, but it's pretty measly: see page 7-8 here https://www.hud.gov/sites/documents/4155-2_7.PDF
If you can avoid an FHA loan it might be a good idea to try, but the alternate programs are more credit-score sensitive and actually have income caps:
If you can, buy a house that needs a little work, get it cheaper, put 10% down, go with a conventional mortgage and do a little updating yourself over a year... Then after a year refinance it and tell the mortgage broker you NEED the appraisal to come in showing 20% equity to remove MIP otherwise it's just not worth it.
I've done this twice and both times the appraisal came in at the exact number I needed to remove the MIP...
You pay 1.75% of the loan amount, rolled into the loan, as up-front Mortgage Insurance Premium (MIP), as well as a monthly factor that is usually .00085 of the loan amount, usually for the entire length of the loan, but refer to their chart here: https://www.hud.gov/sites/documents/15-01MLATCH.PDF
Refundable: Not really. If you do an FHA refinance within the first 36 months, a portion of the up-front premium will be credited to you, on a sliding scale, but it's pretty measly: see page 7-8 here https://www.hud.gov/sites/documents/4155-2_7.PDF
If you can avoid an FHA loan it might be a good idea to try, but the alternate programs are more credit-score sensitive and actually have income caps:
Some brokers are less strict than others. The OP might want to shop around. I just did that and was able to get a conventional with 10% down, but the broker said he was still approving people with less down. My regular bank required 15%, which I did not feel comfortable doing.
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