Finance
The FHA mortgage insurance premium (MIP) differs from PMI in that:
AMIP is paid only at closing, while PMI is paid monthly
BMIP is charged by the government on FHA loans, while PMI is private insurance on conventional loans✓ Correct
CMIP can be waived if the credit score is above 700
DPMI is government-backed while MIP is privately provided
Explanation
FHA mortgage insurance premium (MIP) is charged by the federal government on FHA loans. PMI is private insurance required on conventional loans with less than 20% down.
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Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
State-Specific Concepts
Continuing Education
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