Private
Mortgage Insurance
Private
mortgage insurance, also known as PMI,
is the money you pay on a monthly basis, to a private mortgage
insurance company. You must pay these insurance companies because
they want to be covered in case of a foreclosure
or default on your loan due to nonpayment.
It
is logical to ask yourself the question, why can’t they just sell
the house and pay the debt. Believe me, they will. However the time and
fee’s involved usually runs higher than the mortgage itself, not
to mention the people they must pay to do the work for them.
There
are loans out there that do not require PMI, the most popular ones being
the one’s backed by the United States government, such as FHA,
and VA
to name a few.
The
majority of mortgage programs out there do not fall under government
programs, so if you don’t fall into one of their categories,
you will have to go with a conventional
mortgage, and you will have to pay PMI.
When
you go with a conventional
loan, the mortgage company protects their interest by using private
insurance companies, hence the term private
mortgage insurance.
There
is a way to avoid
paying PMI, and that would be to put down 20%. But lets face it, how
many of us can afford to do that. Twenty percent down is the what the
mortgage companies believe will protect their investment in the result
of a foreclosure.
Private
Mortgage Insurance is just another fact in the life of owning
a home. But please continue to do your research, there are non-government
programs out there such as an 80/20
loan, and the 80/10/10
loan.
Points
Good
Faith Estimate
Origination
Fees
ARM
Loans
Payments
Toward Principal
|
|
