What does a PMI refer to?

Asked by Trulia San Diego, San Diego, CA Sun Jun 2, 2013

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15
Kawain Payne, Agent, Seal Beach, CA
Sun Jul 7, 2013
PMI= Private mortgage insurance.


This insurance is not what it sounds like.

It does not cover YOU, it covers the bank. You pay for a policy that protects the bank from YOU.

If you obtain a mortgage to purchase a home and you put less than 20% (in most cases) you will be required by your lender to pay PMI.

FHA now requires PMI for the LIFE of the loan, in years past once you get 20% or more equity you could get out of paying PMI.

Kawain Payne, Realtor
2 votes
John Costigan, Agent, El Cajon, CA
Wed Mar 12, 2014
Private mortgage insurance protects the lener when you have less than a 20% down payment. Sometimes when the equity position gets to a point that it exceeds 20% the PMI can be taken off of the mortgage or may be enough to consider refinancing.
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Mon Mar 10, 2014
Private Mortgage Insurance is what PMI stands for. It's typically required when a buyer is not getting a conventional loan with at least 20% down. It's required until a buy has 20% equity in their home either by making payments for several years or improving them home and in some rare instances when the market values go up sufficiently. It can be a monthly add or or can be paid in advance or paid through a higher mortgage rate.
0 votes
Steve McCoole, , San Diego, CA
Mon Mar 10, 2014
Keep in mind there are options on how to pay the PMI. For example it can be a monthly payment (borrower paid) or added to the interest rate (lender paid). What is best can depend on your situation, there are upsides and downsides to both.


Steve McCoole
Mortgage Alliance Group
619-283-4000
http://www.yourlowratemortgagestore.com
0 votes
Kari Shea, Agent, San Diego, CA
Tue Jun 4, 2013
Private Mortgage Insurance
0 votes
, ,
Mon Jun 3, 2013
It stands for Private Mortgage Insurance.

Historically, in order to get the very low 30 year rates that mortgages get, they have to have a loan amount under 80% of the property value. This because the investors want to see a AAA rating. So in order to get those low rates, and allow you to borrow a larger percentage, they insure the amount over the 80%.

There is also a close cousin called MI or mortgage insurance which is what government loans have that serves the same purpose.
0 votes
Sam Ibrhaim, Agent, Chula Vista, CA
Mon Jun 3, 2013
A non govt. loan that requires you (borrower) to pay a monthly insurance fee to the lender if the loan amount is 80% or more .
It's different than the home owners insurance premium .
Once the property is appraised later on after you purchase it at a higher value, to make it less than 80% loan to value then the lender will remove the private mortgage insurance aka (PMI)....but you gotta go through the process for removing the PMI .... Check on that before you sign anything .
0 votes
Daniel Lehman, , San Diego County, CA
Mon Jun 3, 2013
ALL conventional loans with less than 20% down have what is called "private mortgage insurance" which is basically an insurance policy FOR the bank that pays them if you default. You pay the premiums so it is an added cost of borrowing.

There is ALWAYS PMI on conventional loans with less than 20% down. Any situation with "no PMI" and less than 20% down typically means that you are paying for it with an increase in the interest rate, as opposed to through monthly payments.

Conventional PMI can be removed typically with 20% equity and 2 years of making payments. This is why it TYPICALLY doesnt make sense to take a loan with "no PMI" with under 20% down payment. If you take a higher interest rate and "no pmi" you cannot reduce your interest rate after the 2 years with 20% equity. Therefore it has always been my stance that it is best in most cases to pay a monthly premium that can be removed later.

FHA also has a version of PMI on ALL loans, which is paid no matter how much you put down, but it is more to subsidize their program, as opposed to a true insurance premium.

When you are looking at potential PMI, the most important thing about your transaction is how you structure the loan and PMI. If I can help in any way, please let me know.

Thanks!

Daniel Lehman
WJ Bradley Mortgage
858-345-4725
0 votes
Joan Wilson, Agent, San Diego, CA
Mon Jun 3, 2013
private mortgage insurance (PMI)

If your down payment on a home is less than 20 percent of the appraised value or sale price, your lender may will require you to get mortgage insurance. A mortgage insurance policy protects your lender in case you default on the payments.

Let me know if I can help you in any way!
Joan Wilson (Realtor, SRES, Ecobroker, Certified REO, HAFA, and Short Sale Specialist)
Pacific Sotheby’s International Realty
http://joanwilson.pacificsothebysrealty.com/eng
Call or Text: 760-757-3468
Joan.Wilson@sothebysrealty.com
CA DRE License # 01341483
0 votes
, ,
Mon Jun 3, 2013
We can offer loans that do not have an additional PMI charge...sometime a better value for you and your family. Loans up to 95% loan to value with 5.0% as down payment.
0 votes
, ,
Mon Jun 3, 2013
Private Mortgage Insurance...this insures the lender against a loss in case of default on the loan. Hope this helps!
Mike Disney
0 votes
Maria Claudia…, Agent, San Diego, CA
Mon Jun 3, 2013
All answers below are correct and valid. Please keep in mind that there are some types of loans that can offer you a lower down payment and no PMI. depending on your specific situation those options may suit you best.
I am not a lender, but I have used an incredible one for all my clients and they were all able to close on their properties quickly and flawlessly.
If you want his name please email me privately
claudia@fitproperties.com
0 votes
Hector Gaste…, Agent, Coronado, CA
Sun Jun 2, 2013
Private Mortgage Insurance.
When the borrower does not have 20% the lender requires the borrower to pay this type of insurance to protect themselves from the additional risk they are taking.
0 votes
Rashard Scott, Agent, San Diego, CA
Sun Jun 2, 2013
Private mortgage insurance...Feel free to contact me to discuss the real estate process.

Rashard Scott
RBD Residential
619-565-5604
Scottie1421@Gmail.com

Search homes for free at http://www.militaryhomesinsandiego.com

CA DRE# 01703306
0 votes
, ,
Sun Jun 2, 2013
Private Mortgage Insurance. There are 4 types on conventional loans. VA has funding fees but not monthly insurance. FHA has both funding fees and month insurance however it's considered mutual mortgage insurance since it's not "private" per se. See attached web reference for details on the 4 types of conventional mortgage insurance.
0 votes
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