YOU ASK:

Does mortgage insurance premium (MIP) last for the term of the contract on a house?

WE ANSWER:

Usually, no.

According to the Homeowners Protection Act, lenders are required to drop mortgage insurance (and its corresponding premiums) once you reach a specified loan-to-value or equity level, which is currently set at 78%. So with this, mortgage insurance payments will not last for the term of the contract on a house.

You can also request that the mortgage insurance be terminated once you reach 20% equity on the house.

Remember, the sooner you are able to pay off a portion of the loan that corresponds to the requirement, the sooner you can get rid of mortgage insurance. That means you save up on mortgage insurance premiums as well as additional interests on the principal.

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