What is Private Mortgage Insurance?

Asked by Ana, Haverhill, MA Tue Jun 28, 2011

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Richard Rosa, Agent, Haverhill, MA
Fri Dec 2, 2011
Hi Ana,

I have included a link to an article explaining mortgage insurance.

- Rich Rosa
Buyers Brokers Only, LLC
0 votes
scott farmer, Agent, Scottsdale, AZ
Tue Jun 28, 2011
To add to what has already been included here is the possibility for a bank to also purchase mortgage insurance on a consumer loan without the homeowners knowledge -- even when the buyer put 20% or more down. There are cases of this and until you attempt to short sale your home will you find out that the bank has done this.
0 votes
Mike Elias (…, , Haverhill, MA
Tue Jun 28, 2011
PMI stands for private mortgage insurance; it allows buyers to purchase a home with the less than 20 % down payment and home owners who are looking to refinance that have less than 20% equity in their homes. It’s an insurance policy for the lender in the case the mortgage becomes delinquent. For more information please email me at melias@mortgagenetwork.com
0 votes
Lew Corcoran, Agent, Easton, MA
Tue Jun 28, 2011
Whenever you put less than 20% down on a home (or have less than 20% equity in a refinance), lenders require you to purchase private mortgage insurance (PMI).

PMI insurers the lender in case your default on the mortgage. PMI also allows you to purchase a home with less than 20% down - enabling you to purchase a home now instead of waiting perhaps years to accumulate the savings necessary for a large downpayment.
Web Reference:  http://www.LewCorcoran.com
0 votes
Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Tue Jun 28, 2011
That is insurance paid to insure the lender against default when the loan amount is more than 80% of the value of the property, or purchase price, whichever is less.
Private Mortgage Insurance is privided by various companies, Genworth, Radian, PMI, to name a few. The rates vary based on credit score, loan to value, property type, etc.
MIP, or Mortgage Insurance Premium, is the insurance provided by FHA.
There is an up-front fee for MIP, but not PMI. The monthly premium on MIP went up so much recently that PMI is now starting to look like a much better deal, especially for those with good credit scores who don't have much to put down. Another great feature that can be done with PMI, that is rarely used, is what is called the Super Single Premium by some companies, not sure what others may call it. This is a 1 time fee paid at closing so that no monthly PMI amount is paid. The borrower can either pay it up-front, have a credit back from the lender to cover it by paying a higher rate, or a combination. I was once asked by a client why everyone doesn't do this, and I told him it was because most loan officers don't know enough about it to either advise about it at all, or know how to present the option to borrowers.
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