Finance
What is 'mortgage insurance premium' (MIP) and when is it required?
AMIP is paid on all mortgage loans and covers the lender's operating costs
BMIP is required on FHA loans; it protects the FHA against losses if a borrower defaults. It includes an upfront premium and annual (monthly) premiums✓ Correct
CMIP is optional and chosen by the borrower for additional coverage
DMIP is the same as homeowner's insurance
Explanation
Mortgage Insurance Premium (MIP) is specific to FHA loans. Borrowers pay an upfront MIP (typically 1.75% of the loan amount) plus ongoing annual premiums (paid monthly). MIP compensates the FHA for the risk of insuring loans with lower down payments.
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