Question: What is the difference between FHA and PMI premiums?

Answer: Private mortgage insurance (PMI) premiums are generally paid on a monthly basis. Coverage can often be stopped once an owner has equity worth at least 20 percent above the value of the first loan. See your lender for details.

FHA works differently. First, there is an up-front fee, typically 2.25 percent of the loan amount (but 2.0 percent for some first-time buyers). This up-front fee can be added to the loan amount.

In addition, there are monthly FHA premiums that are generally paid for the life of the mortgage. If you pay off or refinance a loan, and the mortgage pool of which your FHA loan is a part has few claims, then you may be entitled to a refund.