WHAT IS MIP?
What is this mysterious PMI and why does it effect your payment with MIP? Yes I know it.
Is private mortgage insurance and it adds to your monthly payment with mortgage insurance premium, but what is it for? Most first time home buyers in the Kenai, Soldotna, K-Beach and surrounding areas may think it covers them if they default on the mortgage, right. Sorry that is really not how it works. Private mortgage insurance is to cover a possible loss to the investor if the defaults and the property foreclosed upon. It does not relieve you the borrower of the debt owed our your obligation to repay.
Some mortgage insurance premiums are paid in lump sums other as a monthly payments. The premium is substantial and can last for years. So why would anyone pay for it? Private mortgage insurance allows many homeowners the opportunity to own when they otherwise would have been declined for a loan. It also allows for a lower down payment on most loans.
When considering a loan be aware that PMI varies substantial between loan programs and can vary within the same loan program dependent upon your cash down payment and credit score. When considering a loan ask your lender these four questions:
• Do I need private mortgage insurance?
• How much will it cost?
• Does the premium change if I place more money down?
• When will I stop paying the mortgage insurance premium?