MIP - Mortgage Insurance Premium Reduction

MIP Reduction

LOWER YOUR MIP. INCREASE YOUR CASH FLOW.

Whether you’re refinancing, purchasing your first home, or buying your next, we can help you take advantage of the newly lowered mandatory monthly mortgage insurance premiums (MIP). The good news is the Federal Housing Administration recently dropped the cost from an average of 1.35 to 0.85.

Looking to purchase your first home?

For first-time homebuyers, this MIP decrease translates to a $900 reduction in annual mortgage payments on average. It also increases your purchasing power by about $18K. Embrace will ensure you get the most value out of your new FHA home loan.

Recently closed on a FHA loan?

You can benefit, too. If you closed your loan on June 3, 2013 or after and currently have a 30-year mortgage, you can refinance and lower your MIP. And who doesn’t want lower monthly payments? When you refinance with Embrace, you can get a new, lower rate mortgage with better terms, and reduce your monthly payments.

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How long does MIP last?

The lifespan of your FHA MIP reduction depends on a variety of factors, including when you applied for an FHA loan, the loan terms (15-year, 30-year, etc.), and whether you put down more or less than 10%-20% when closing. Generally, if you put less than 10% down, the MIP duration will last the full length of your home loan. If you put more than 10% down, your MIP reduction could last 11 years, though some extensions may apply.

How can you reduce your premiums or eliminate them altogether?

Request MIP elimination.

If you have 20 percent equity in your home, you can contact your lender and request that your private insurance be canceled. There’s usually a simple form to fill out, and within a few months, you’ll have no premiums at all. (This applies only to private MIP.)

Refinance.

When you refinance, you essentially get an entirely new loan, with a new rate, terms, and MIP fees. Depending on how much you’ve paid toward your home, you may be able to avoid MIP altogether. If not, your premiums should be much lower.

Try piggybacking loans.

Piggyback loans can help you eliminate PMI by giving you a 20 percent stake in your home right off the bat. Here’s how it works: put 10 percent down, take out a loan for 80 percent of the home, and then take out a second loan to pay for the other 10 percent. The second loan will have a slightly higher interest rate, but you’ll be able to eliminate your insurance premiums.

Increase your down payment.

If you haven’t already bought a home and want to keep your MIP costs low, consider upping your down payment. The closer you get to 20 percent, the lower your premiums will be.

Boost your credit score.

MIP costs are largely based on your credit history and score, so before you buy a house, work on improving your numbers (and your co-borrower’s). Pay your bills on time, reduce your existing debts, and avoid adding any new loans or credit cards to your name.

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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Are you eligible for an MIP Cancellation?

If you applied for your original FHA home loan prior to June 3, 2013, you may be able to perform an MIP Cancellation (also known as MIP Elimination) once you hit the 5-year mark and, in some instances, 78% LTV.

We can explain how you might benefit from the recent MIP reductions, and act as an experienced guide through every step of the loan process.

Call Embrace today at 800-620-6292 to speak with one of our knowledgeable Loan Officers and learn more about your loan options. Or fill out our no obligation form and one of our specialists will contact you.

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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.