For FHA loans with a loan-to-value ratio greater than 90%, how long must the borrower pay annual mortgage insurance premiums (MIP)?
Correct Answer
C) For the life of the loan
For FHA loans with LTV greater than 90%, annual MIP must be paid for the life of the loan and cannot be removed through automatic cancellation. This requirement was implemented by HUD to strengthen the FHA insurance fund.
Why This Is the Correct Answer
For FHA loans with LTV greater than 90%, annual MIP must be paid for the life of the loan and cannot be removed through automatic cancellation. This requirement was implemented by HUD to strengthen the FHA insurance fund.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
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A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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