Mortgage Insurance

Private Mortgage Insurance(PMI)

Should you decide to take out one loan whose balance is over 80% of the homes’ value (your equity), Private Mortgage Insurance is one option for keeping the interest rate lower and overall terms of the loan agreeable.  Private mortgage insurance is taken out to guarantee the repayment of the loan should you default.

There are various ways to contract with private mortgage insurance, but the most common is monthly.  In a common situation, the homeowner is  required to pay a monthly fee for the mortgage insurance, and this fee is added to your mortgage payment. The advantage to private mortgage insurance is beneficial to all parties.  For the lender there is the insurance that if you, the borrower default, they will not be left with a bad mortgage.  For the borrower, one can qualify with a smaller down payment(less than 20% down) and once  a stronger equity position is realized (what that equity position is depends on insurer) the homeowner can petition to have the mortgage insurance removed.  Private mortgage insurance rates and providers vary so it is important to speak to a professional familiar with this market.