MIP is another form of security for the lender. Where lenders have different requirements in this area it will many times be tied to the ‘loan to value’ of the property. In an example if the bank requires a loan to value of 80% or less, then if you are borrowing more than 80% of the value established by the appraiser they may require mortgage insurance until such time the loan amount goes below the 80% of the value. If you have MIP and you feel that the loan amount is less then the banks requirements then you can ask that the MIP be dropped. The bank will want to confirm this and have the property appraised at your expense. MIP is for the protection of the bank in the case you default on the loan. They will be protected against any financial loses in taking the property back and selling it themselves. This is one reasons short sales have not been a very successful method of liquidating property where the borrower cannot meet his financial agreement with the bank.
I am assuming you are talking about Private Mortgage Insurance premiums. This is meant to protect the lenders from failure of high-risk borrowers to pay. This is mandatory in case the buyers down-payment is below 20%. A buyer can structure the mortgage as First and Second so even if the down-payment is less than 20% you can still avoid PMI.
There is another Mortgage insurance which pays off the mortgage in case of death etc. You may want to consult and think in detail before subscribing to this insurance.
When a home buyer has little or nothing in the house, the lender is at risk of losing part of the amounts lent should any of a number of things happen — one of the borrowers dies, is disabled, loses their job, etc.
Mortgage insurance is a contract between an insurance company [or FNMA, GNA, VA, etc.] and the lender which pays off any loss on the loan should the lender have to foreclose for any reason and the proceeds of the sale do not fully repay the amounts owed.
Some or many MI contracts limit the “amounts owed” to principle plus interest, or even principle only.
As always, the buyer pays for this in the form of higher monthly payments.
does this help?
Because you are purchasing the home with FHA (federal housing assistance) financing, which only requires 3 percent down. If you were purchasing the home with a conventional loan you would have to put down at least 20 percent, so since the bank is taking on 97 percent of the price of the house they want you to pay an insurance of some sort, hence the Mortgage insurance premium. Here is a link explaining how you get rid of the payment after you purchase the househttp://www.ourbroker.com/?p=2293
And here is a little more information on the MIPhttp://www.azmortgageguru.com/fhas-upfro…
MIP is another form of security for the lender. Where lenders have different requirements in this area it will many times be tied to the ‘loan to value’ of the property. In an example if the bank requires a loan to value of 80% or less, then if you are borrowing more than 80% of the value established by the appraiser they may require mortgage insurance until such time the loan amount goes below the 80% of the value. If you have MIP and you feel that the loan amount is less then the banks requirements then you can ask that the MIP be dropped. The bank will want to confirm this and have the property appraised at your expense. MIP is for the protection of the bank in the case you default on the loan. They will be protected against any financial loses in taking the property back and selling it themselves. This is one reasons short sales have not been a very successful method of liquidating property where the borrower cannot meet his financial agreement with the bank.
I am assuming you are talking about Private Mortgage Insurance premiums. This is meant to protect the lenders from failure of high-risk borrowers to pay. This is mandatory in case the buyers down-payment is below 20%. A buyer can structure the mortgage as First and Second so even if the down-payment is less than 20% you can still avoid PMI.
There is another Mortgage insurance which pays off the mortgage in case of death etc. You may want to consult and think in detail before subscribing to this insurance.
When a home buyer has little or nothing in the house, the lender is at risk of losing part of the amounts lent should any of a number of things happen — one of the borrowers dies, is disabled, loses their job, etc.
Mortgage insurance is a contract between an insurance company [or FNMA, GNA, VA, etc.] and the lender which pays off any loss on the loan should the lender have to foreclose for any reason and the proceeds of the sale do not fully repay the amounts owed.
Some or many MI contracts limit the “amounts owed” to principle plus interest, or even principle only.
As always, the buyer pays for this in the form of higher monthly payments.
does this help?
Because you are purchasing the home with FHA (federal housing assistance) financing, which only requires 3 percent down. If you were purchasing the home with a conventional loan you would have to put down at least 20 percent, so since the bank is taking on 97 percent of the price of the house they want you to pay an insurance of some sort, hence the Mortgage insurance premium. Here is a link explaining how you get rid of the payment after you purchase the househttp://www.ourbroker.com/?p=2293
And here is a little more information on the MIPhttp://www.azmortgageguru.com/fhas-upfro…
Mortgage Insurance simply pay off the mortgage in the event you kick the bucket before the mortgage is paid off.