Home Buying in 78746>Question Details

peteypete323, Home Buyer in Austin, TX

What is the difference between PMI and MIP?

Asked by peteypete323, Austin, TX Mon Jul 9, 2012

Help the community by answering this question:

Answers

6
Brad Yzermans’ answer
There have been many changes to FHA's Mortgage Insurance premium.

For most borrowers, the monthly paid mortgage insurance will now be permanent for the life of the loan.....never to be be removed unless you refinance into a conventional loan.

The actual FHA's MIP premiums have gone up as well, making Private Mortgage Insurance a much better option if you have at least a 680 credit score.

You can read the details on the latest changes to FHA's mortgage insurance in the web reference link below.
0 votes Thank Flag Link Mon Apr 22, 2013
A quick glimpse of the different meanings :

FHA -- MIP = Mortgage Insurance Premium (These are all for refinances & purchases - there are a few different things to know when it comes to streamline refinances) FHA Streamline Refinances -- knowing your options -- Part 2 of 2 I will break down the MI and MIP on streamlines at another time.
You have upfront MIP and annual MIP. As it stands now, until they change this to risk base pricing in the next few months, your upfront MIP is 1.5% of the base loan amount. Meaning, if you borrow $100,000 (base loan amount), your upfront MIP will be $1,500 and your new loan amount would end up being $101,500.

In regards to your annual MIP which is paid monthly is sometimes call MMI, monthly mortgage insurance. This is the easy part. No matter how much you put down, your annual MI is .5 percent of the base loan amount, which in my example is $100,000. You would take 5% and multiply it to the base loan amount which would be $500 annually. Then divide it by 12 months and this is your monthly mortgage insurance. = $41.67 per month as your MI.

Some basic rules to remember in regards to annual MIP. (which is really monthly MI when it's all said and done with)

If your new loan term is great than 15 years, your upfront MIP is 1.5%, as stated above. And your annual MI is .50. Your annual MI will be terminated once you reach 78% LTV either by normal amortization or by making additional principal payments. But in order to cancel it by the 2nd method, you need to get a knew appraisal. In either case, MMI stays on for 5 years no matter what, even if you were to put down 20%.
If your new loan term is 15 years or less, your upfront MIP is still 1.5%, but your MMI would only be .25 of the base loan amount. If you put 10% or more down on the 15 year scenario, then you would have no annual MI.
The 5 year rule for annual MI would not apply for terms of 15 years or less.




Conventional -- PMI = Private Mortgage Insurance There are different percentages depending on how much you put down. And since it can be a little complicated, depending on down payments and now fico scores, here is a blog that I did earlier to break it down. PMI (Private Mortgage Insurance); why you need it and the different types of PMI……
Now, with the changing guidelines of Fannie Mae and Freddie Mac, it's even more important to understand if you put less than 25% down and/or your credit score is less than 680, that you will be subject to extra add ons in regards to points.
1 vote Thank Flag Link Mon Jul 9, 2012
Now I'm really confused. My broker says that MIP is 1.75% and the monthly part of the MIP is 1.25%. This is different than what you said.
Flag Tue Jul 10, 2012
MIP is the FHA mortgage insurance premium. It is paid in two charges: an upfront premium, which is now 1.75% on a high ratio loan (96.5%), and usually financed, AND an annual premium of 1.25% of the loan amount, paid in monthly installments with your PITI payment. They use these funds to self-insure their loans.

PMI is private mortgage insurance, and insures the lender against loan failure on a conventional loan. This charge can be paid in several ways: monthly, one time financed premium, one time cash premium, or a split of the two. The amount depends on the down payment, loan term, and credit score of the buyer.

Putting 20% down avoids PMI on a conventional loan, but not on an FHA loan.

Hope this helps. To be sure, FHA has been raising their MIP charges quite drastically over the last few years, and it's hard to keep up with the exact charges.

Barbara Coker
NMLS#228545
Licensed Mortgage Loan Officer
100% Home Loans All Over Texas
Web Reference: http://www.thecokerteam.com
0 votes Thank Flag Link Wed Jul 11, 2012
FHA = MIP = Mortgage Insurance Premium.
There is an up front premium and a monthly premium

Conventional = PMI = Private Mortgage Insurance.

The difference?
PMI is insured by an insurance company.
MIP goes to HUD which is self insured.

Tom Burris
Mortgage Banker
DallasLoanGuy.com
(214) 763-4629 cell/text/nights/weekends(Really!!)
tomburris@dallasloanguy.com
Lending all across the entire Great State of Texas!!
NMLS# 335055
Search Dallas area MLS for FREE. No registration => http://www.ntreisinnovia.net/cgi-ntr/BR_login?0501134
0 votes Thank Flag Link Mon Jul 9, 2012
Thanks for clarify this.
Flag Mon Jun 30, 2014
FHA -- MIP & Conventional -- PMI
0 votes Thank Flag Link Mon Jul 9, 2012
Cannot really add much to that other post, except that the MIP rates have gone up a bit.


Tom Burris
Mortgage Banker
DallasLoanGuy.com
(214) 763-4629 cell/text/nights/weekends(Really!!)
tomburris@dallasloanguy.com
Lending all across the entire Great State of Texas!!
NMLS# 335055
Search Dallas area MLS for FREE. No registration => http://www.ntreisinnovia.net/cgi-ntr/BR_login?0501134
0 votes Thank Flag Link Mon Jul 9, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Home > Texas > Travis County > Austin > 78746 > Home Buying in 78746 > Question
Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer