Posts tagged MIP
How do you calculate mortgage insurance?

Mortgage insurance is a type of insurance policy that covers the lender in case the borrower defaults on the loan. It is usually required in the form of private mortgage insurance (PMI) when borrowers don’t make a down payment of at least 20% on most conventional loans. For FHA loans, it’s called a mandatory mortgage insurance premium (MIP).  If you fit into either of those categories, then mortgage insurance is something you’ll have to deal with.

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Is It Worth It to Take on a Loan with PMI?

Taking on a loan with PMI can often increase the amount of options you have, meaning that you may be able to take on a larger or riskier loan than you would regularly qualify for. Often, this means you can buy a home earlier, and start building up its equity without having to save up the full 20% of the home’s purchase price before doing so.

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Is Mortgage Insurance Tax-Deductible?

In 2006 to 2016 homeowners were in fact able to deduct mortgage insurance premiums per the Protecting Americans from Tax Hikes (PATH) Act. Congress must directly approve this deduction every year following 2016.

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Is There a Difference Between PMI and MIP?

While private mortgage insurance (PMI) generally exists to protect lenders for all types of home loans, MIP specifically protects FHA government-backed loans.A MIP (Mortgage Insurance Premium) protects the lender regardless of the amount of the down payment.

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How Can I Avoid Paying Private Mortgage Insurance (PMI)?

There are a few options when looking to avoid paying private mortgage insurance on your conventional loan. Private mortgage insurance is tacked on to a conventional loan when less than 20% down payment is paid.

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Definition of a Mortgage Insurance Premium (MIP)

What is a mortgage insurance premium? A mortgage insurance premium (MIP) is an insurance plan implemented in FHA loans regardless of the down payment amount you put down on the loan. The MIP is paid directly to the Federal Housing Administration (FHA) instead of a private company as Private Mortgage Insurance (PMI) is.

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Is Private Mortgage Insurance (PMI) Required?

Lenders want to know they'll get their money back when they lend it out. In the event that a borrower can’t produce at least 20% down for a traditional loan, lenders will impose mortgage insurance on the borrower in order to protect the lender in default. Lenders turn to private insurance providers for this, hence the name -- Private Mortgage Insurance (PMI). 

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