Suppose you have obtained a 6 30year fully amortizing FHA mo

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 Multiple Choice $139.13 $1,025.69 $1,669.53 $1,678.88

Solution

Correct Answer is $139.13

Solution:

Information Given :

First Year Average Loan Balance : $1,51,775.25

Additional Mortage Insurance Premium (MIP)= 1.10%

First Year Monthly Insurance Premium = ???

Calculation of First Year Monthly Insurance Premium

First Year Insurance Premium= First Year Average Loan Balance* MIP

= $1,51,775.25*1.10%= $1,669.53

First Year Monthly Insurance Premium= $1669.53/12= $139.13