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%.
There are a few ways in which a homeowner can raise the ltv of his/her home. They can either pay a certain amount of it off over time, or they can get another appraisal done. If the appraisal shows that the home is worth more than it was, then the loan to value ratio raises.
Private mortgage insurance is just another way that lenders can protect themselves from default and foreclosure. Often, foreclosure can lead to a loss of money for a bank if private mortgage insurance is not obtained, which is why many banks require that it be acquired if the borrower cannot put down at least 20% up front. Having this down payment can save a buyer money, though if they do not have it, this type of insurance is a good alternative.
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Is there anyone that could help us with a predatory lending issue that was recently discovered after attempts to get a loan modification? We have been working or trying to work with Bank of America (formerly Countrywide) for over a year. The loan is now sitting in the Office of the President, and had been pulled by the legal department due to a complaint that we filed with the Ohio Attorney Generals office. We keep running into brick walls, and were told we cannot make any kind of mortgage payments until our complaint has been resolved. We would love to have a forensic audit done on our mortgage, although I am not certain that anything can be done now since the loan origination was in October 2002, although all of the fraud was just discovered in July, 2009. If you know of anything we can do, we would be greatful!