An FHA loan requires both an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium. When can the annual MIP typically be cancelled on an FHA loan originated after June 2013?
Correct Answer
A) For most FHA loans with less than 10 percent down, the annual MIP remains for the life of the loan
For FHA loans originated after June 3, 2013, with a down payment of less than 10 percent, the annual MIP remains for the life of the loan. Borrowers who put down 10 percent or more may have MIP removed after 11 years.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
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