MORTGAGE INSURANCE

MORTGAGE INSURANCE

Mortgage Insurance (PMI) – Mortgage insurance simply stated is a private insurance policy that protects the Lender or Investors in case of a mortgage loan default. Private Mortgage insurance (PMI) may be required by the Lender when the loan amount exceeds 80% of the appraised value or purchase price of the home. Another way of explaining it is when the down payment for a purchase of a home is less than 20%, PMI is required. See below for a description of FHA Mortgage Insurance (MIP).

 HOW DO I PAY THE PREMIUM ON MORTGAGE INSURANCE (PMI)?

With PMI, the entire amount of the insurance premium for the year is paid upfront at closing and in most cases can be financed. In addition, a monthly mortgage insurance premium is added to your monthly mortgage payment so that at the end of 12 months, you have the following year’s PMI paid.

WHAT FACTORS DETERMINE MORTGAGE INSURANCE (PMI)?

The required amount of PMI coverage is determined by factors like the loan term, loan type, and loan to value (LTV). LTV is defined as the loan amount divided by the appraised value of the home

CAN I CANCEL PMI?

Yes, in most instances, the PMI can be canceled when the loan to value (LTV) reaches a certain amount. Contact your Loan Officer for additional information.