Suppose you have obtained a 6%, 30 year fully-amortizing FHA mortgage loan of $152,625 to finance the purchase of your primary residence. In so doing, you must pay an additional mortgage insurance premium (MIP) of 1.10%. If the first-year average loan balance is $151,775.25, determine the first-year monthly insurance premium payment.

Question

Quizplus · Accepted Answer

To calculate the first-year monthly insurance premium payment, you multiply the first-year average loan balance by the MIP rate and then divide by 12 (for 12 months). So, $151,775.25 * 1.10% = $1,669.53 annually. Dividing $1,669.53 by 12 gives $139.13 per month.

Suppose You Have Obtained a 6%, 30 Year Fully-Amortizing FHA