Home | Ask Your Question | Mortgage Glossary
Search a lender for:  

Untitled Document

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.


Good Faith Estimate

Origination Fees

ARM Loans

Payments Toward Principal

You'll be re-directed to Top-Lenders.com


Books about Closing Costs:

Most Relevant Mortgage Books