Real estate agent's simple understanding of Private Mortgage Insurance.

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Real estate agent's simple understanding of Private Mortgage Insurance.

Options for a homebuyer to obtain Private Mortgage Insurance?.

 1. Borrower paid Monthly- The borrower will pay a monthly premium up until the loan balance reaches 78% of the value of the home. The lower the down payment, the higher the monthly insurance premium.

2. Borrower Paid Single Premium- The borrower will pay an upfront Mortgage Insurance premium at closing. There will be NO monthly mortgage insurance payment. 

3. Lender Paid Single Premium- 

4. Mortgage Insurance Financed- The upfront mortgage insurance premium can be financed into the borrowers loan amount. There will be NO monthly insurance payment. The subject property, though, must appraise for a value that includes the insurance premium being added to loan amount. 

 Briefly, the main differences for Mortgage Insurance for a Conventional Loan compared to an FHA loan are as followed:

1. Mortgage insurance on a conventional loan is terminated once the balance of the mortgage reaches 78% of the value of the home. FHA requires mortgage insurance to be paid monthly for the TERM of the loan regardless of future loan to value.

2. Mortgage insurance on a conventional loan has several options as stated above. On FHA loans, Mortgage insurance is paid upfront AND is paid monthly. 

If your buyer has the ability to put at least 5% down payment, going the Conventional route could be more cost saving than putting 3.5% down payment on an FHA loan.

As mentioned this is my understanding as a real estate agent of private mortgage insurance best to always consult with your local mortgage expert.




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Kathy Stoltman
Rockwood Realty - Ventura, CA
Ventura County Real Estate Consultant 805-746-1793

Dolores, this is a great explanation of a confusing topic for some buyers. 

May 03, 2013 04:25 AM #1
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

This is a great explanation that I leave for the lender to explain - not my area of expertise. 

May 15, 2013 11:42 PM #2
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Dolores "Dee" Mauriello

Realtor, Homes For Sale Wayne NJ
Call today for information on Wayne area "Smart Seller Program"
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