Which statement about FHA Mortgage Insurance Components is true?

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Multiple Choice

Which statement about FHA Mortgage Insurance Components is true?

FHA mortgage insurance consists of two parts: an Upfront Mortgage Insurance Premium (UFMIP) and an annual Mortgage Insurance Premium (MIP) that is paid monthly. The upfront premium is paid at closing (or can be rolled into the loan). The annual MIP is calculated each year as a percentage of the outstanding loan balance and is collected monthly as part of the mortgage payment. Because both components exist and the monthly cash flow includes the annual MIP, the statement that UFMIP is required and the annual MIP is paid monthly is true. The other options are incorrect because MIP is not optional, the upfront premium is not the only premium, and the annual premium is paid monthly—not quarterly.

FHA mortgage insurance consists of two parts: an Upfront Mortgage Insurance Premium (UFMIP) and an annual Mortgage Insurance Premium (MIP) that is paid monthly. The upfront premium is paid at closing (or can be rolled into the loan). The annual MIP is calculated each year as a percentage of the outstanding loan balance and is collected monthly as part of the mortgage payment. Because both components exist and the monthly cash flow includes the annual MIP, the statement that UFMIP is required and the annual MIP is paid monthly is true. The other options are incorrect because MIP is not optional, the upfront premium is not the only premium, and the annual premium is paid monthly—not quarterly.

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