Question about PMI for FHA mortgage loan?

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I was looking over our commitment letter for our mortgage from Wells Fargo and it states…

“For an FHA loan, Buyer must either pay or finance the up-front mortgage insurance premium of $ 1,832.50 and must pay a monthly MIP charge to start at $ 136.47 per month.”

I was confused about this as I didnt realize that there are two separate payments here….

This basically means that I have to pay $ 1,832.50 up front (or finance) AND pay another $ 136.47 per month. If I choose to finance the first part, it would be $ 152.71 plus $ 136.47 per month that I’d be paying for the PMI.

Does this sound right? Everyone I’m speaking to says that it sounds a little high…. I called the mortgage banker and he confirmed that this is 2 separate payments per month, BUT I have called and asked him questions in the past and he has given me incorrect info…. So I was hoping he’s wrong about this too!! I can definitely afford it, but it’s expensive!!

Any thoughts??
It doesnt say….. I’m wondering if that $ 1,832.50 is an upfront fee meaning that it’s a one time fee (unless you finance) and that after we pay that off, we continue with just the $ 136.47 per month…..

  1. Reply
    May 16, 2011 at 4:23 am

    how many months would you have to pay the $ 152.71?

  2. Reply
    Appraiser guy
    May 16, 2011 at 5:15 am

    You pay PMI until you have 20% equity

  3. Reply
    Shane F
    May 16, 2011 at 5:35 am

    You don’t have to pay upfront of $ 1,832.50 if you can’t pay in full. They will charge you $ 152.71 per month from your escrow balance (short). Also you will be charged $ 136.47 per month for PMI. It is likely your mortgage payment will increase if you decided to pay $ 152.71 per month. If you pay upfront and your mortgage payment will be the same per month. I am with Wells Fargo Mortgage for almost 7 years. Hope it helps.

  4. Reply
    Lisa L
    May 16, 2011 at 6:00 am

    Most people finance the upfront MIP in their loan. The loan amount is higher. You will have monthly MIP until your LTV reaches 78% (not 80%) or 5 years, whichever comes later. This is figured as if you never make any extra payment towards principal & the sale price is used. If you look at your Truth In Lending it will tell you when the MIP comes off…average is about 126 months, but depends on down payment & loan amount.

  5. Reply
    Beverly S
    May 16, 2011 at 6:30 am

    The upfront premium of $ 1832.50 means your loan amount is going to be $ 183,250.00… That can be added to the loan & you won’t pay it monthly if you finance it. The monthly premium is added to your payment. Your lender is wrong about the upfront premium being paid monthly- the full amount is paid at closing & if your seller is paying your closing costs it will be a part of that.

    Lisa L. is also correct, monthly is only paid for 5 years or till you reach 78% LTV- but must be at least 5 years.

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