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Carol Said:

i am applying for a mortgage for a townhouse. is mip insurance required up front plus a monthly fee?

We Answered:

As of December 27, 2005 condos require the up-front MIP. There are still a lot of references out there that say otherwise, but the HUD site is going to have the right information.

Some sources say that you can finance your up-front MIP costs, but you should speak to your lender to get advice about what is right for your situation.

Good luck with your purchase, and congratulations!

Raul Said:

do i have to have mortgage insurance?

We Answered:

Mortgage Insurance protects the LENDER (not you). The only way to avoid Mortgage Insurance (especially in today's mortgage environment when lenders want even MORE certainty that a mortgage is a good risk) is to put at least 20% down on the mortgage (making your Loan to Value Ratio (LTV) 80% or less). A loan with an LTV of 80 or below is not considered risky.

Your reference to Katrina makes me think you're thinking of another kind of insurance called "Hazard Insurance" which protects the lender in case your house burns up or blows down, etc. You MUST pay Hazard Insurance too (for the sake of the lender if not yourself).

Here's something to remember... EVERYTHING that happens in the Mortgage Loan Servicing world is occurring for the sake and protection of the LENDER (not you). You're already benefitting because you're living in a house of your choosing without having to come up with the full sales price!

When you pay off your loan, maybe you'll be able to let all your fire and wind insurance lapse, but that would be really stupid. If your $150,000 house burns up, then you've just lost at least $100,000. Insurance exists for a reason. Some insurance policies are rip-offs. Most are not.

Back to the point... Having Mortgage Insurance is not your choice. It's the demand of the lender who's lending you THEIR money for a house. If you can find a lender who will let you out of Mortgage Insurance, then I guarantee that you'll pay a higher interest rate since he's taking a greater risk.

The bottom line is that there's no free lunch. Keep looking if you want, but it's not out there.

Good luck!