how hecms work
More About HECM MIP
A Mortgage Insurance Premium (MIP) must be paid on all HECM loans. Why is this charge needed?
- It provides you with the funds to pay off all your closing costs.
- It covers the cost of your loan processing.
- It guarantees you will obtain all the loan monies you were promised.
“C” is correct. It also allows you to wait to repay the loan until after you and all other owners leave the home -- even if your lender goes out of business, your home’s value decreases, or you live for years longer than might have been expected. The MIP is charged in two parts: You pay a certain percentage of the home’s value upfront at closing. One-twelfth of 1.25% is added monthly (1.25% annually).