MIP stands for Mortgage Insurance Premium. It is a type of insurance that protects the mortgage lender in case the borrower defaults on the loan. MIP is typically required for FHA loans, which are government-backed loans that allow for a lower down payment and have more lenient credit requirements.
MIP is paid as a lump sum at closing or as an ongoing monthly payment, depending on the loan structure. The amount of MIP required will vary depending on the size of the down payment, the loan amount, and the loan term.
MIP can be canceled once certain criteria are met, such as reaching a certain amount of equity in the home or refinancing the loan into a conventional mortgage. It is important for borrowers to understand the terms of their MIP payments and how it affects their overall mortgage costs.
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