What Is Mortgage Insurance?
Mortgage insurance, or PMI, is an insurance policy which compensates lenders if a homeowner defaults on the mortgage. It is typically required when a home buyer has less than a 20% down payment. The benefit of PMI for a home buyer is that it allows for home ownership without a large down payment. As a result of PMI, there are loan programs that require no down payment. The Cain Mortgage Team can help further explain Mortgage Insurance to home buyers in Columbia, Lexington, Chapin, Blythewood and Irmo. For more information on mortgage insurance contact us today at (803)261-9267.
Mortgage Insurance (PMI) can be paid in various methods. Some of those methods are monthly, upfront in a lump sum, or added into your rate. The amount you pay is determined by multiple factors, such as:
- Credit Score
- Loan Type
- Loan to value
- Debt to income ratio
Make sure you ask your Loan Officer how best to reduce the amount you pay.
What Programs Require Mortgage Insurance (PMI)?
All of the major loan types, except VA, require PMI when putting down less than 20%. FHA, USDA and Conventional all require varying amounts of PMI.
Can Mortgage Insurance (PMI) be eliminated?
Yes, it can. On Conventional Loans, it is required to be eliminated when the loan is at 78% of the original mortgage balance. However, it can be eliminated earlier if you apply with the mortgage servicer and you have at least 20% in equity. A new appraisal will be required. Some of the other requirements are as follows:
- The request usually has to be in writing
- You have to have a good payment history
- There might be a requirement to prove there are no other liens on the property, but if there is another lien, it can potentially still be eliminated.
Learn More about Mortgage Insurance
The Cain Mortgage Team can help further explain Mortgage Insurance to home buyers in Columbia, Lexington, Chapin, Blythewood and Irmo. For more information on mortgage insurance contact us today at (803)261-9267.