do I have to have mortgage insurance by law?

Asked by Petie, Brick, NJ Thu Apr 12, 2012

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Ronald Shaff…, Agent, Toms River, NJ
Fri Apr 13, 2012
Good Morning Petie,
It's not a law, it may be a requirement from the mortgage company to insure the money they are loaning you. Generally, if you are putting down less than 20% the lender is making you pay the insurance so they lessen the risk they are taking . There are programs that allow you to put down less than 20% and not have to pay mortgage insurance. If you would like the name of a lender that can help you find one of these programs, let me know.
1 vote
Camille A. M…, Mortgage Broker Or Lender, Bayville, NJ
Mon Aug 20, 2012
FHA once the first 60 months have passed you will no longer have mortgage insurance. They require that you have 22% equity.

Conventional loans entertain lender paid mortgage insurance which is financed into the loan and there is no monthly payment, if you have a conventional loan that requires mortgage insurance and you beleive that you have 20% equity in the loan you can provide your lender with an appraisal and a letter requesting that the mortgage insurance be dropped. Iit is however at their dicression that it be removed.

hope this helps.

Camille Marotta, Branch Manager, NMLS 9838
Bayville, NJ
First Alliance Home Mortgage
0 votes
Andrew Tisel…, Agent, Clifton, NJ
Mon Aug 20, 2012
once you have %80 equity you can drop the mortgage insurance
0 votes
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Fri Apr 13, 2012
That isn’t a law, but it is an underwriting requirement in one form or another on most traditional mortgages if the down payment is less than 20% of the purchase price.

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
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Joseph S. Co…, Mortgage Broker Or Lender, New Jersey
Fri Apr 13, 2012
when putting less than 20% down, banks will require you to pay some form of mortgage insurance to mitigate their risk on the loan. (Banks deem loans with less than 20% to have a greater layer of risk/less skin in the game).

The amount of insurance you will have to pay will be determined by the type of loan, and the manner in which you will pay it. For example, when putting 3.5% down using an fha loan, you will be required to pay a monthly mortgage insurance with a factor of 125 basis points and and up-front premium (allowed to be financed) of 1.75%.

Or you could have lender paid mortgage insurance in which the premium is paid through the interest rate. My most common mortgage insurance now is a single premium. It is paid up front or financed, saving you the monthly expense. Reach out to me or watch the video below to find out more. Best of luck!!…

Joseph S. Cordova NMLS# 146855
Lincoln Mortgage Company
8003 Lincoln Drive West, Suite F
Marlton, NJ 08053
office: (856) 810-1200 ext. 242
direct fax: (206) 333-0946
cell: (856) 304-2381
Apply online at:
0 votes
Diane Glander, Agent, Spring Lake, NJ
Fri Apr 13, 2012
If you put down less than 20%, banks will require it. It's not a law as far as I know, just a contingency on obtaining a mortgage.
Once the value increases 20% or you pay down the loan to 80%, you can request it be withdrawn.
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Wayne Odenbr…, Agent, Mountain Lakes, NJ
Thu Apr 12, 2012
There is no law. The Mortgage companies will insist upon it if you down payment is below a certain . Its taht simple
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Camille A. M…, Mortgage Broker Or Lender, Bayville, NJ
Thu Apr 12, 2012
If you are purchasing a home with a FHA mortgage, then yes you must have mortgage insurance. It is required on all government loans as they are insured by the Department of Housing and Urban Development.

If you have a conventional loan with less than 20% in the deal than year Mortgage Insurance is required. In our current economy it is a necessary evil. The only program available without mortgage insurance is a USDA loan and it is driven by the property address and the household income. So if you believe that you would like to purchase a home without mortgage insurance there is a website that will let you know if the property is acceptable or not.

For more information from a professional with 30 year of experience, please call

Camille Marotta
Branch Nanager 732-539-9300 NMLS 9838
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Alex Kushnir, Agent, Monmouth, IL
Thu Apr 12, 2012
If you are asking about PMI (private mortgage insurance), than PMI is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan. It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property. Typical rates are $55/mo. per $100,000 financed, or as high as $1,500/yr. for a typical $200,000 loan. The PMI may be payable up front, or it may be capitalized onto the loan in the case of single premium product.

This type of insurance is usually only required if the downpayment is less than 20% of the sales price or appraised value (in other words, if the loan-to-value ratio (LTV) is 80% or more). Once the principal is reduced to 80% of value, the PMI is often no longer required.
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