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Determining the value of your home...What is private mortgage insurance?
Private mortgage insurance is insurance that is usually required by the lender if the borrower is not able to put 20% down on a mortgage up front. Basically, this type of insurance protects the lender from losing money in the event of a default. If the property goes into foreclosure and the bank sells it at auction, it may not bring enough money to pay off the loan, which is why private mortgage insurance is usually required on behalf of the lender.
Typically, it costs about $55 a month to insure a $100,000 loan. Sometimes a bank will allow the borrower to discontinue payments once the loan to value (LTV) ratio reaches 80%, though usually the buyer pays until the LTV reaches 78%. Read more
What is mortgage insurance?
Mortgage insurance is a policy that is placed to protect title holders or the lender if the homeowner happens to pass away, starts missing payments, or just cannot meet the requirements of the mortgage contract. This insurance can also be referred to as; mortgage title insurance, mortgage life insurance, or even private mortgage insurance (PMI).
PMI may also be referred to as “lenders mortgage insurance” if the lender happens to pay off the premium and not the homeowner. Lenders will often do this in exchange for a higher fee structure and or interest rate on the mortgage. Since the lender paid the premium, the premium is passed along to the homeowners monthly mortgage payment. Read more