|FHA MIP refers to the mortgage insurance premium that one pays to this federal institution in order to have a home loan at affordable terms. In lieu of the less stringent underwriting rules FHA offers a guarantee to its approved lenders that their money will not be lost in mortgage transactions.
To meet the claims made by a lender in the event of a payment delinquency or mortgage default, FHA maintains a mutual mortgage insurance fund, which is made up of premiums paid by borrowers. These are nothing but FHA mortgage insurance premium referred to as MIP.
The upfront mortgage insurance premium (UFMIP), which must be financed into the loan, is payable in cash at the time of closing. The annual MIP has to be paid monthly along with the regular mortgage payment. Some policy changes in recent times have increased the monthly MIP for those homeowners who have a loan to value (LTV) ratio at 80 percent for a loan term greater than 15 years.
However, laws have also been made for the removal of taxes on FHA insurance premiums, although not completely. To get information whether your MIP is tax deductible or whether you qualify for a deduction in your mortgage insurance payments, you should contact Internal Revenue Service (IRS) or consult a tax expert.
FHA MIP Refund
As mentioned earlier, the FHA MIP paid by a borrower goes to a mutual mortgage insurance fund that the HUD maintains in order to fulfill the claims of a lender. If the borrower continues to make payment without ever being delinquent for at least seven years, he may be able to get back a portion of the money he has so far paid in insurance.
There are certain rules regarding reimbursement of this amount, which is commonly known as FHA MIP Refund, and one has to check the HUD website to use resources like refund chart or refund processor. For more information, you can also call (800) 697-6967 or mail to P.O. Box Number 23699, Washington DC 20026-3699.
FHA MIP Payment
The termination of FHA MIP Payment depends on several factors including the loan-to-value ratio and the length of the loan. For a mortgage with a term more than 15 years, one can stop paying MIP the moment LTV reaches 78 percent with the condition that they must have paid premiums for at least 5 years.
For a mortgage with less than 15 year terms, the LTV ratio remains the same but the length of the time the borrower has been making payments is not counted. This cancellation is not applicable to loans not insured by the Mutual Mortgage Insurance Fund.
For more information on FHA MIP calculator, costs, credit, down payment, elimination, funding fee, quotes, schedule, streamline, definition, example, waiver, and tips explore the resources provided on HUD website.