Not so sexy topic: PMI

For most people, private mortgage insurance is the only way they will be able to buy a home or refinance their existing mortgage! So with something so critical to this process, maybe we should discuss it a bit, don't you think?

PMI is short for Private Mortgage Insurance. This is an insurance policy that protects the lender in case of default of the borrower. The idea is that if a home owner loses their home to foreclosure due to lack of repayment, the bank will only get a portion of the money they lent back when the home is sold. Private mortgage insurance is designed to cover the remaining deficit (if any) for the lender.

When a home is foreclosed on, most lenders expect to get at least 80% of a home's value. So when a borrower takes out a loan that is more than 80% of the home's value, most lenders want insurance to cover that additional exposure. In order to offer the loan, the lender will require the borrower pay for the private mortgage insurance to cover the additional risk.

Additional information:
Different types of Private Mortgage Insurance
How to Avoid PMI

Be sure to add your thought or comment at www.EdNailor.com

_______________________________________________

This helpful information courtesy of
The Ed Nailor Mortgage Team

Ed Nailor loans Charlotte

704-651-8704 phone or visit www.EdNailor.com

 

1 Comments on Not so sexy topic: PMI

Important topic.  Many home owners either don't know how it works or have forgotten about it and continue to pay the premium.

01/17/2008 10:54 AM by Bill Gillhespy Fort Myers Beach Realtor (Century 21 Tripower Realty)

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