Mortgage Insurance Premiums and Primary Mortgage Insurance
This article is just a tad bit deceiving. This type of insurance , actually varies by name when the loan is a conventional loan, or a FHA(Government insured loan)
The true definition of Primary Mortgage Insurance, also know as PMI, when discussing loans that are not federally insured (Fannie Mae, Freddie Mac, and or VA) is actually referred to as MIP which is the acronym for Mortgage Insurance Premiums most commonly used with FHA Secured loans. It is more difficult to have MIP removed from your loan then PMI, when dealing with Privately owned loans, and it i important to state that fact.
It is virtually the same thing as PMI, but if you were speaking to your actual lender or servicer, dependent on the type of loan you secured, and if your loan to value ratio is greater then 80% you may actually be paying a portion of your escrow payment to cover this expense.
PMI (Primary Mortgage Insurance)-refers to protection for the lender in the event of the mortgagor or borrower going delinquent, defaulting, or in worst cases, foreclosure on a mortgage loan. This monthly fee may be collected as a lump sum at loan closing or as a periodic amount included in the monthly payment, or both and is usually included in escrow payment that will usually holds funds for property insurance, and or tax disbursements when due .
Mortgage Insurance Premiums are a requirement in most cases when dealing with a high risk loan, FHA loan, or a loan that has a LTV of 80% or GREATER. They are not usually referred to as PMI when the loan is FHA secured.
Ways to actually have this insurance removed from the loan would be a reaching 80% Loan to value ratio, demonstrating excellent payment history, refinancing into a new loan that is not FHA insured including the mortgage insurance cost in the closing costs .
Primary Mortgage Insurance (PMI) –
Non-FHA Mortgage Insurance, protecting the Lender from Financial loss if borrower defaults on loan due to inability to sustain payments for the remaining life of the loan(i.e. foreclosure, deed in lieu, short sale)
Mortgage Insurance Premium (MIP)
Mortgage insurance protecting Government investors including Fannie Mae, Freddie Mac, etc. From financial loss in the event of mortgagor or borrower defaulting on the mortgage, etc.
There is my elaborate and detailed as well as accurate depiction of Mortgage insurance