MIP - Mortgage Insurance Premium Reduction

MIP Reduction

LOWER YOUR MIP. INCREASE YOUR CASH FLOW.

What is Mortgage Insurance?

Simply put, mortgage insurance is a policy taken out on your loan that protects the lender in the event of default or foreclosure. Of course no one expects to default on their mortgage, but life isn’t always predictable and lenders need assurance that they will get their money back in the event your financial health takes a turn for the worst.

In this scenario, the lender is the beneficiary if you default on the mortgage loan for any reason.

How do I eliminate or reduce my mortgage insurance payment?

If you’re currently required to carry mortgage insurance, there is light at the end of the tunnel: you don’t have to keep it for the entire length of the loan. You can pay your loan down faster by paying more than the required minimum each month, which will help you build equity in the home faster. Then, once you have at least 20% equity in your home, you can request to eliminate the mortgage insurance premium all together. You can also refinance with Embrace and if your new Loan-To-Value (LTV) is below the required threshold, you may not have to pay mortgage insurance on your new loan at all.

View Loan Examples >>

Other tips for reducing or eliminating MIP

GET STARTED

Be a model borrower. Make your payments on time, all the time. If you prove yourself to be responsible, you may be able to negotiate with your lender to lower your mortgage insurance payments, or possibly even remove them all together. Usually, at least 24 months of stellar payment history is necessary.

Monitor your home’s value. If your house has appreciated in value, your loan-to-equity ratio will improve. This change could be significant enough to establish that you have enough equity in the house to drop the mortgage insurance all together.

Are you eligible for MIP cancellation?

If you applied for your original FHA home loan prior to June 3, 2013, you may be able to perform and MIP cancellation (also known as MIP Elimination). To understand how much you pay in mortgage insurance on top of your principle and interest, check your monthly mortgage statement or give an Embrace expert a call for a no-obligation mortgage evaluation.

I APPLIED FOR FHA LOANS PRIOR TO JUNE 3, 2013:

Original Loan Term

20, 25, 30 years
 

20, 25, 30 years
 

20, 25, 30 years

15 years

15 years

15 years

Original Down Payment

Less than 10%
 

10% to less than 20%
 

Less than 10%

Less than 10%

10% to less than 20%

20% or more

MIP Duration

78% LTV based on original purchase price (5 years minimum)

78% LTV based on original purchase price (5 years minimum)

5 years

78% LTV

78% LTV

No MIP

I APPLIED FOR FHA LOANS ON OR AFTER JUNE 3, 2013:

Original Loan Term

20, 25, 30 years

20, 25, 30 years

15 years

15 years

Original Down Payment

Less than 10%

10% to less than 20%, or 20%+

Less than 10%

10% to less than 20%, or 20%+

MIP Duration

Life of loan

11 years

Life of loan

11 years

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30 Year Fixed-Rate Refinance Mortgage Example:
The payment on a $225,000 30 year fixed-rate cash out refinance loan at 3.875% with a 70% loan-to-value (LTV) is $1058.04 with 2 points due at closing. The Annual Percentage Rate (APR) is 4.123%. This assumes a FICO score greater than 680. Payment does not include taxes and insurance premiums, which will result in a higher monthly payment. Interest rates and annual percentage rates (APRs) are based on current market rates and are subject to change without notice. Rates offered may be subject to pricing add-ons related to property type, loan amount, LTV, credit score and other variables. Mortgage insurance may be required for LTV >80%. If mortgage insurance is required, the mortgage insurance may increase the APR and the monthly payment. Stated rate may change or not be available at the time of loan commitment or lock-in.

30 Year Fixed-Rate Purchase Mortgage Example:
The payment on a $225,000 30 year fixed-rate purchase loan at 3.49% with a 70% loan-to-value (LTV) is $1,009.10 with 2 points due at closing. The Annual Percentage Rate (APR) is 3.733%. This assumes a FICO score greater than 700. Payment does not include taxes and insurance premiums, which will result in a higher monthly payment. Interest rates and annual percentage rates (APRs) are based on current market rates and are subject to change without notice. Rates offered may be subject to pricing add-ons related to property type, loan amount, LTV, credit score and other variables. Mortgage insurance may be required for LTV >80%. If mortgage insurance is required, the mortgage insurance may increase the APR and the monthly payment. Stated rate may change or not be available at the time of loan commitment or lock-in.