Fha Mortgage Insurance Premium

The FHA loan insurance program was established to provide loan assistance for first-time buyers to secure a home of their own. But there are certain factors that affect your ability to secure this type of loan especially since most loaners do not have 20 percent down payment while others have a bad credit history. The FHA mortgage insurance premium (or MIP) is then included in the loan to avoid using money from taxes to pay for defaulted FHA mortgages.

The FHA mortgage insurance premium has basically similar functions as the ones offered by private mortgage companies. The similarity begins with a down payment requirement of below 20 percent as with conventional mortgage loans.

In some cases, an FHA up front mortgage insurance premium is required, which differentiates this scheme from traditional mortgage insurances. To calculate the upfront fee, it is 1.5% of your mortgage insurance, which is added to the total cost that you will have to pay throughout the span of the loan.

As for the FHA mortgage insurance premium rate, it is calculated to be .5% of the annual amount of the loan. You will then divide that into 12 months (for the entire year) so you can determine the monthly premium charges for your FHA mortgage insurance.

If you are really keen on saving money, there is no point neglecting a mortgage insurance for your home since you can avail of the FHA mortgage insurance premium refunds. This applies to all homeowners who secured a loan in between September 1, 1983 and January 1, 1991. In addition to securing a loan in between the said dates, you can also qualify for a refund if you paid upfront fees at closing or when you did not default your mortgage loan.

Although some might find it a burden to secure mortgage insurance, it is important to have since it will serve as your protection to your homeownership. Learning about the average FHA mortgage insurance premium rate is an important starting point for you to manipulate the factors available to you so you can get the best possible deal available.